The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of First Financial Bancorp (NASDAQ:FFBC).
Is First Financial Bancorp (NASDAQ:FFBC) ready to rally soon? The smart money is getting more bullish. The number of bullish hedge fund positions increased by 3 in recent months. Our calculations also showed that FFBC 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). FFBC was in 8 hedge funds' portfolios at the end of the first quarter of 2020. There were 5 hedge funds in our database with FFBC positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. Keeping this in mind let's take a peek at the latest hedge fund action encompassing First Financial Bancorp (NASDAQ:FFBC).
What does smart money think about First Financial Bancorp (NASDAQ:FFBC)?
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FFBC over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GLG Partners was the largest shareholder of First Financial Bancorp (NASDAQ:FFBC), with a stake worth $2.6 million reported as of the end of September. Trailing GLG Partners was Citadel Investment Group, which amassed a stake valued at $2.2 million. Millennium Management, Holocene Advisors, and Royce & Associates 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 Quantinno Capital allocated the biggest weight to First Financial Bancorp (NASDAQ:FFBC), around 0.14% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to FFBC.
As one would reasonably expect, key money managers have jumped into First Financial Bancorp (NASDAQ:FFBC) headfirst. Millennium Management, managed by Israel Englander, initiated the most outsized position in First Financial Bancorp (NASDAQ:FFBC). Millennium Management had $1.3 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also made a $0.7 million investment in the stock during the quarter. The other funds with brand new FFBC positions are Peter Muller's PDT Partners, Hoon Kim's Quantinno Capital, and Dmitry Balyasny's Balyasny Asset Management.
Let's now review hedge fund activity in other stocks similar to First Financial Bancorp (NASDAQ:FFBC). These stocks are The Geo Group, Inc. (NYSE:GEO), The Chemours Company (NYSE:CC), Monro Inc (NASDAQ:MNRO), and LivePerson, Inc. (NASDAQ:LPSN). All of these stocks' market caps are closest to FFBC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GEO,14,83253,-8 CC,32,239323,3 MNRO,14,87142,-4 LPSN,15,96549,-8 Average,18.75,126567,-4.25 [/table]
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $8 million in FFBC's case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand The Geo Group, Inc. (NYSE:GEO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks First Financial Bancorp (NASDAQ:FFBC) is even less popular than GEO. Hedge funds dodged a bullet by taking a bearish stance towards FFBC. 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 FFBC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FFBC investors were disappointed as the stock returned -8.4% 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.
