Was The Smart Money Right About Loading Up On First Horizon National Corporation (FHN)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 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 First Horizon National Corporation (NYSE:FHN) in this article.

Is First Horizon National Corporation (NYSE:FHN) a worthy stock to buy now? Prominent investors were in a bullish mood. The number of bullish hedge fund bets advanced by 4 recently. First Horizon National Corporation (NYSE:FHN) was in 35 hedge funds’ portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FHN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 31 hedge funds in our database with FHN holdings at the end of March.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are dozens of methods stock market investors use to evaluate their stock investments. Two of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the market by a superb amount (see the details here).

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s check out the key hedge fund action surrounding First Horizon National Corporation (NYSE:FHN).

How are hedge funds trading First Horizon National Corporation (NYSE:FHN)?

At second quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in FHN over the last 20 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in First Horizon National Corporation (NYSE:FHN). Citadel Investment Group has a $115 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Carlson Capital, managed by Clint Carlson, which holds a $85.1 million position; 2.3% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions contain Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to First Horizon National Corporation (NYSE:FHN), around 4.06% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, designating 3.89 percent of its 13F equity portfolio to FHN.

As industrywide interest jumped, key money managers were breaking ground themselves. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the largest position in First Horizon National Corporation (NYSE:FHN). Adage Capital Management had $26.3 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $8.6 million position during the quarter. The following funds were also among the new FHN investors: Emanuel J. Friedman’s EJF Capital, Mark Lee’s Forest Hill Capital, and Sander Gerber’s Hudson Bay Capital Management.

Let’s also examine hedge fund activity in other stocks similar to First Horizon National Corporation (NYSE:FHN). These stocks are TFI International Inc. (NYSE:TFII), Vicor Corp (NASDAQ:VICR), New Residential Investment Corp (NYSE:NRZ), Companhia Paranaense de Energia – COPEL (NYSE:ELP), Vivint Smart Home, Inc. (NYSE:VVNT), Alkermes Plc (NASDAQ:ALKS), and Gildan Activewear Inc (NYSE:GIL). All of these stocks’ market caps match FHN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $384 million in FHN’s case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand Vivint Smart Home, Inc. (NYSE:VVNT) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks First Horizon National Corporation (NYSE:FHN) is more popular among hedge funds. Our overall hedge fund sentiment score for FHN is 89. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and still beat the market by 20.1 percentage points. Unfortunately FHN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FHN were disappointed as the stock returned 6.2% since the end of the second quarter (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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