In this article we will analyze whether Financial Institutions, Inc. (NASDAQ:FISI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is FISI a good stock to buy now? Financial Institutions, Inc. (NASDAQ:FISI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that FISI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare FISI to other stocks including Franklin Covey Co. (NYSE:FC), Investors Title Company (NASDAQ:ITIC), and Party City Holdco Inc (NYSE:PRTY) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of indicators investors employ to evaluate publicly traded companies. Two of the most useful indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can beat the market by a very impressive amount (see the details here).
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the latest hedge fund action surrounding Financial Institutions, Inc. (NASDAQ:FISI).
Do Hedge Funds Think FISI Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FISI over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Financial Institutions, Inc. (NASDAQ:FISI), which was worth $8.2 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $2.5 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and D E Shaw 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 Zebra Capital Management allocated the biggest weight to Financial Institutions, Inc. (NASDAQ:FISI), around 0.51% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to FISI.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bailard Inc. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Zebra Capital Management).
Let’s now review hedge fund activity in other stocks similar to Financial Institutions, Inc. (NASDAQ:FISI). These stocks are Franklin Covey Co. (NYSE:FC), Investors Title Company (NASDAQ:ITIC), Party City Holdco Inc (NYSE:PRTY), Gold Standard Ventures Corp (NYSE:GSV), Lannett Company, Inc. (NYSE:LCI), Paratek Pharmaceuticals Inc (NASDAQ:PRTK), and America First Multifamily Investors, L.P. (NASDAQ:ATAX). This group of stocks’ market valuations resemble FISI’s market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FC,10,12289,-2 ITIC,6,32769,0 PRTY,12,49255,-2 GSV,7,21541,2 LCI,10,26062,1 PRTK,9,19459,-3 ATAX,1,607,-1 Average,7.9,23140,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $16 million in FISI’s case. Party City Holdco Inc (NYSE:PRTY) is the most popular stock in this table. On the other hand America First Multifamily Investors, L.P. (NASDAQ:ATAX) is the least popular one with only 1 bullish hedge fund positions. Financial Institutions, Inc. (NASDAQ:FISI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FISI is 75.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on FISI as the stock returned 40.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.