We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards Fulton Financial Corp (NASDAQ:FULT).
Is Fulton Financial Corp (NASDAQ:FULT) the right investment to pursue these days? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions fell by 3 in recent months. Our calculations also showed that FULT isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="400"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now let's view the latest hedge fund action encompassing Fulton Financial Corp (NASDAQ:FULT).
How are hedge funds trading Fulton Financial Corp (NASDAQ:FULT)?
At Q4's end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FULT over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Fulton Financial Corp (NASDAQ:FULT), with a stake worth $8 million reported as of the end of September. Trailing Arrowstreet Capital was Winton Capital Management, which amassed a stake valued at $7.2 million. GLG Partners, Gardner Russo & Gardner, and Holocene Advisors 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 Sciencast Management allocated the biggest weight to Fulton Financial Corp (NASDAQ:FULT), around 0.16% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.1 percent of its 13F equity portfolio to FULT.
Seeing as Fulton Financial Corp (NASDAQ:FULT) has experienced bearish sentiment from hedge fund managers, it's safe to say that there is a sect of fund managers that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Renaissance Technologies cut the biggest stake of all the hedgies followed by Insider Monkey, valued at about $1.6 million in stock, and Mika Toikka's AlphaCrest Capital Management was right behind this move, as the fund dumped about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Fulton Financial Corp (NASDAQ:FULT) but similarly valued. We will take a look at Independent Bank Corp (NASDAQ:INDB), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), World Fuel Services Corporation (NYSE:INT), and PolyOne Corporation (NYSE:POL). This group of stocks' market values match FULT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INDB,14,17622,1 BHVN,35,500626,-1 INT,22,223464,3 POL,24,265035,2 Average,23.75,251687,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $252 million. That figure was $28 million in FULT's case. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Fulton Financial Corp (NASDAQ:FULT) is even less popular than INDB. Hedge funds dodged a bullet by taking a bearish stance towards FULT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately FULT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FULT investors were disappointed as the stock returned -38.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.