Hedge Funds Are Going Back and Forth On FBL Financial Group (FFG)
Debasis Saha
5 min read
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of FBL Financial Group (NYSE:FFG).
FBL Financial Group (NYSE:FFG) was in 8 hedge funds' portfolios at the end of the first quarter of 2020. FFG has seen an increase in support from the world's most elite money managers lately. There were 7 hedge funds in our database with FFG positions at the end of the previous quarter. Our calculations also showed that FFG 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a 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, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the latest hedge fund action surrounding FBL Financial Group (NYSE:FFG).
How have hedgies been trading FBL Financial Group (NYSE:FFG)?
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the fourth quarter of 2019. By comparison, 7 hedge funds held shares or bullish call options in FFG a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is FFG A Good Stock To Buy?
The largest stake in FBL Financial Group (NYSE:FFG) was held by Royce & Associates, which reported holding $7.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $5.2 million position. Other investors bullish on the company included Winton Capital Management, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to FBL Financial Group (NYSE:FFG), around 0.1% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to FFG.
Now, specific money managers have jumped into FBL Financial Group (NYSE:FFG) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in FBL Financial Group (NYSE:FFG). Marshall Wace LLP had $0.1 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as FBL Financial Group (NYSE:FFG) but similarly valued. These stocks are Apollo Commercial Real Est. Finance Inc (NYSE:ARI), WW International, Inc. (NASDAQ:WW), Beacon Roofing Supply, Inc. (NASDAQ:BECN), and LGI Homes Inc (NASDAQ:LGIH). All of these stocks' market caps are similar to FFG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARI,17,41289,1 WW,22,175765,-15 BECN,20,164410,-2 LGIH,14,53155,1 Average,18.25,108655,-3.75 [/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 $109 million. That figure was $15 million in FFG's case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand LGI Homes Inc (NASDAQ:LGIH) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks FBL Financial Group (NYSE:FFG) is even less popular than LGIH. Hedge funds dodged a bullet by taking a bearish stance towards FFG. 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 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately FFG wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FFG investors were disappointed as the stock returned -24.1% during the second quarter (through June 17th) 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.
