Is FCNCA Stock A Buy or Sell?

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With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was First Citizens BancShares Inc. (NASDAQ:FCNCA).

Is FCNCA stock a buy? Investors who are in the know were getting more bullish. The number of long hedge fund positions increased by 6 lately. First Citizens BancShares Inc. (NASDAQ:FCNCA) was in 27 hedge funds’ portfolios at the end of December. The all time high for this statistic is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FCNCA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 21 hedge funds in our database with FCNCA holdings at the end of September.

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 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 124 percentage points since March 2017 (see the details here).

Chuck Royce of Royce & Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 new hedge fund action encompassing First Citizens BancShares Inc. (NASDAQ:FCNCA).

Do Hedge Funds Think FCNCA Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FCNCA over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in First Citizens BancShares Inc. (NASDAQ:FCNCA). Royce & Associates has a $57.9 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Nitorum Capital, managed by Seth Rosen, which holds a $52.6 million position; the fund has 2% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Pasco Alfaro and Richard Turnure’s Miura Global Management, Tom Purcell and Marco Tablada’s Alua Capital Management and Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. In terms of the portfolio weights assigned to each position Toscafund Asset Management allocated the biggest weight to First Citizens BancShares Inc. (NASDAQ:FCNCA), around 10.04% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, setting aside 7.16 percent of its 13F equity portfolio to FCNCA.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Nitorum Capital, managed by Seth Rosen, assembled the biggest position in First Citizens BancShares Inc. (NASDAQ:FCNCA). Nitorum Capital had $52.6 million invested in the company at the end of the quarter. Pasco Alfaro and Richard Turnure’s Miura Global Management also initiated a $37.9 million position during the quarter. The other funds with new positions in the stock are Tom Purcell and Marco Tablada’s Alua Capital Management, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, and Anand Parekh’s Alyeska Investment Group.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as First Citizens BancShares Inc. (NASDAQ:FCNCA) but similarly valued. We will take a look at Silicon Laboratories Inc. (NASDAQ:SLAB), Tempur Sealy International Inc. (NYSE:TPX), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Gildan Activewear Inc (NYSE:GIL), MultiPlan Corporation (NYSE:MPLN), Huntsman Corporation (NYSE:HUN), and Wyndham Hotels & Resorts, Inc. (NYSE:WH). This group of stocks’ market values match FCNCA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SLAB 18 62750 -8
TPX 43 1264121 -3
SPCE 23 114596 -1
GIL 17 625623 -1
MPLN 25 477152 -8
HUN 29 512556 5
WH 26 666874 -7
Average 25.9 531953 -3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $532 million. That figure was $351 million in FCNCA’s case. Tempur Sealy International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand Gildan Activewear Inc (NYSE:GIL) is the least popular one with only 17 bullish hedge fund positions. First Citizens BancShares Inc. (NASDAQ:FCNCA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FCNCA is 59.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on FCNCA as the stock returned 50% since the end of Q4 (through 4/19) 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.