Hedge Funds Are Piling Into New York Community Bancorp, Inc. (NYCB)

·6 min read

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 have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider New York Community Bancorp, Inc. (NYSE:NYCB) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

New York Community Bancorp, Inc. (NYSE:NYCB) was in 30 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. NYCB investors should be aware of an increase in hedge fund sentiment lately. There were 25 hedge funds in our database with NYCB positions at the end of the first quarter. Our calculations also showed that NYCB isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 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.

Noam Gottesman GLG Partners
Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's take a glance at the latest hedge fund action encompassing New York Community Bancorp, Inc. (NYSE:NYCB).

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

At second quarter's end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NYCB over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in New York Community Bancorp, Inc. (NYSE:NYCB) was held by D E Shaw, which reported holding $61.1 million worth of stock at the end of June. It was followed by Arrowstreet Capital with a $54.1 million position. Other investors bullish on the company included Kahn Brothers, Adage Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to New York Community Bancorp, Inc. (NYSE:NYCB), around 7.41% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 1.71 percent of its 13F equity portfolio to NYCB.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Renaissance Technologies, created the most valuable position in New York Community Bancorp, Inc. (NYSE:NYCB). Renaissance Technologies had $22.4 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also made a $6.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin's Citadel Investment Group, Joseph P. Colmery and Steven J. Didion's JCSD Capital, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as New York Community Bancorp, Inc. (NYSE:NYCB) but similarly valued. These stocks are Travel + Leisure Co. (NYSE:TNL), Flowers Foods, Inc. (NYSE:FLO), Signify Health, Inc. (NYSE:SGFY), CIT Group Inc. (NYSE:CIT), Switch, Inc. (NYSE:SWCH), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), and Science Applications International Corp (NYSE:SAIC). This group of stocks' market caps resemble NYCB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TNL,30,668680,0 FLO,21,283246,-5 SGFY,13,167408,-15 CIT,30,751796,2 SWCH,16,243201,6 APLS,31,877120,-3 SAIC,22,271138,4 Average,23.3,466084,-1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $466 million. That figure was $394 million in NYCB's case. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the most popular stock in this table. On the other hand Signify Health, Inc. (NYSE:SGFY) is the least popular one with only 13 bullish hedge fund positions. New York Community Bancorp, Inc. (NYSE:NYCB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NYCB is 87.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on NYCB as the stock returned 27.5% since the end of Q2 (through 10/15) 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.

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