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Were Hedge Funds Right About Flocking Into First Horizon National Corporation (FHN) ?

Does First Horizon National Corporation (NYSE:FHN) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

First Horizon National Corporation (NYSE:FHN) investors should be aware of an increase in hedge fund sentiment lately. FHN was in 23 hedge funds’ portfolios at the end of June. There were 16 hedge funds in our database with FHN positions at the end of the previous quarter. Our calculations also showed that FHN isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are numerous formulas shareholders use to grade stocks. A duo of the less utilized formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a significant margin (see the details here).

FHN_oct2019

Let’s analyze the latest hedge fund action surrounding First Horizon National Corporation (NYSE:FHN).

What does smart money think about First Horizon National Corporation (NYSE:FHN)?

At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 44% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FHN over the last 16 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Sander Gerber of Hudson Bay Capital

The largest stake in First Horizon National Corporation (NYSE:FHN) was held by Millennium Management, which reported holding $61.3 million worth of stock at the end of March. It was followed by EJF Capital with a $40.4 million position. Other investors bullish on the company included Citadel Investment Group, Carlson Capital, and Diamond Hill Capital.

As aggregate interest increased, key hedge funds were breaking ground themselves. Carlson Capital, managed by Clint Carlson, created the most outsized position in First Horizon National Corporation (NYSE:FHN). Carlson Capital had $17.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $9.2 million position during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, Mike Vranos’s Ellington, and Cliff Asness’s AQR Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as First Horizon National Corporation (NYSE:FHN) but similarly valued. These stocks are OneMain Holdings Inc (NYSE:OMF), Empire State Realty Trust Inc (NYSE:ESRT), Affiliated Managers Group, Inc. (NYSE:AMG), and ADT Inc. (NYSE:ADT). This group of stocks’ market values are closest to FHN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OMF 27 359958 -4
ESRT 12 142029 -2
AMG 20 383803 -3
ADT 20 157383 4
Average 19.75 260793 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $261 million. That figure was $210 million in FHN’s case. OneMain Holdings Inc (NYSE:OMF) is the most popular stock in this table. On the other hand Empire State Realty Trust Inc (NYSE:ESRT) is the least popular one with only 12 bullish hedge fund positions. First Horizon National Corporation (NYSE:FHN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on FHN as the stock returned 9.4% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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