At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards First Interstate Bancsystem Inc (NASDAQ:FIBK).
Is First Interstate Bancsystem Inc (NASDAQ:FIBK) a buy, sell, or hold? Investors who are in the know are taking a pessimistic view. The number of long hedge fund bets went down by 5 in recent months. Our calculations also showed that FIBK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's view the fresh hedge fund action regarding First Interstate Bancsystem Inc (NASDAQ:FIBK).
What have hedge funds been doing with First Interstate Bancsystem Inc (NASDAQ:FIBK)?
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -42% from the fourth quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in FIBK a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in First Interstate Bancsystem Inc (NASDAQ:FIBK), which was worth $17.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $6.8 million worth of shares. Marshall Wace LLP, Two Sigma Advisors, and AQR Capital Management 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 AlphaCrest Capital Management allocated the biggest weight to First Interstate Bancsystem Inc (NASDAQ:FIBK), around 0.08% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to FIBK.
Seeing as First Interstate Bancsystem Inc (NASDAQ:FIBK) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Dmitry Balyasny's Balyasny Asset Management dropped the largest stake of the 750 funds watched by Insider Monkey, worth an estimated $10.1 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund dumped about $1 million worth. These moves are important to note, as total hedge fund interest dropped by 5 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as First Interstate Bancsystem Inc (NASDAQ:FIBK) but similarly valued. These stocks are Commercial Metals Company (NYSE:CMC), National General Holdings Corp (NASDAQ:NGHC), Northwest Natural Holding Company (NYSE:NWN), and ASGN Incorporated (NYSE:ASGN). This group of stocks' market valuations are closest to FIBK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMC,19,187336,-8 NGHC,18,186028,2 NWN,17,60220,0 ASGN,19,43700,1 Average,18.25,119321,-1.25 [/table]
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $31 million in FIBK's case. Commercial Metals Company (NYSE:CMC) is the most popular stock in this table. On the other hand Northwest Natural Holding Company (NYSE:NWN) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks First Interstate Bancsystem Inc (NASDAQ:FIBK) is even less popular than NWN. Hedge funds dodged a bullet by taking a bearish stance towards FIBK. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately FIBK wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FIBK investors were disappointed as the stock returned 15.4% during the second quarter (through June 10th) 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 so far in 2020.
