Is New York Community Bancorp, Inc. (NYCB) Going to Burn These Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about New York Community Bancorp, Inc. (NYSE:NYCB) in this article.

Hedge fund interest in New York Community Bancorp, Inc. (NYSE:NYCB) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that NYCB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as MSA Safety Incorporated (NYSE:MSA), Medpace Holdings, Inc. (NASDAQ:MEDP), and Integra Lifesciences Holdings Corp (NASDAQ:IART) to gather more data points.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the latest hedge fund action encompassing New York Community Bancorp, Inc. (NYSE:NYCB).

Do Hedge Funds Think NYCB Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NYCB over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Adage Capital Management held the most valuable stake in New York Community Bancorp, Inc. (NYSE:NYCB), which was worth $70.6 million at the end of the fourth quarter. On the second spot was Kahn Brothers which amassed $56.8 million worth of shares. Arrowstreet Capital, D E Shaw, and Holocene Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to New York Community Bancorp, Inc. (NYSE:NYCB), around 8.79% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, dishing out 1.23 percent of its 13F equity portfolio to NYCB.

Judging by the fact that New York Community Bancorp, Inc. (NYSE:NYCB) has experienced falling interest from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $11.7 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $4.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as New York Community Bancorp, Inc. (NYSE:NYCB) but similarly valued. These stocks are MSA Safety Incorporated (NYSE:MSA), Medpace Holdings, Inc. (NASDAQ:MEDP), Integra Lifesciences Holdings Corp (NASDAQ:IART), Agora, Inc. (NASDAQ:API), Primerica, Inc. (NYSE:PRI), HollyFrontier Corporation (NYSE:HFC), and Foot Locker, Inc. (NYSE:FL). This group of stocks’ market caps are similar to NYCB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSA 17 29716 4
MEDP 21 265560 -4
IART 13 96207 0
API 17 739743 3
PRI 20 498557 -11
HFC 20 157103 -14
FL 28 332073 2
Average 19.4 302708 -2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $329 million in NYCB’s case. Foot Locker, Inc. (NYSE:FL) is the most popular stock in this table. On the other hand Integra Lifesciences Holdings Corp (NASDAQ:IART) is the least popular one with only 13 bullish hedge fund positions. New York Community Bancorp, Inc. (NYSE:NYCB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NYCB is 71.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately NYCB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NYCB were disappointed as the stock returned -8.9% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.