On May 26, 2023, it was reported that First Trust Advisors LP had increased its holdings in shares of First Interstate BancSystem, Inc. by 21.3% during the fourth quarter. The institutional investor had purchased an additional 40,196 shares, totaling their holdings to 229,297 shares worth $8,862,000. Such an increase in holdings can indicate positive sentiment among institutional investors towards the financial services provider’s stock.
Furthermore, on May 18th, First Interstate BancSystem announced its quarterly dividend payment to shareholders of $0.47 per share. This represents an annualized dividend of $1.88 and a yield of 8.05%, indicating healthy returns for investors who hold stock in the company long-term. However, it is important to note that the ex-dividend date for this dividend was Friday, May 5th.
In recent news regarding major shareholder Julie A. Scott’s transactions with First Interstate BancSystem stock, there has been a significant amount of insider selling within the past three months totaling over $14 million dollars worth of shares sold by corporate insiders alone. Between Wednesday, May 17th and Tuesday February 28th of this year alone Julie A. Scott sold a total of 350,223 shares valued at $11,696,925.
While insider selling typically raises concerns for investors about a company’s future prospects and financial stability affecting their ability to perform well over the long term; only time will tell how First Interstate BancSystem performs going forward amidst these developments and how it affects investor sentiment towards the stock in question.
Overall however even with these events taken into account; it appears that institutional investors remain interested in holding onto First Interstate BancSystem’s stock at least initially due to added purchasing activity by said clients lately via newly increased holdings logs first reported by Observers within research firms like NRF Equity Research or Goldman Sachs & Co LLC who have touted their analytics and insights services’ abilities to generate growing investor interest for advisory clients.
Hedge Funds Show Interest in First Interstate BancSystem Despite Warning from Analysts
First Interstate BancSystem, a financial services provider based in Montana, has recently been the subject of interest from hedge funds and other institutional investors. Ronald Blue Trust Inc., Quadrant Capital Group LLC, HBK Sorce Advisory LLC, Belpointe Asset Management LLC and PNC Financial Services Group Inc. all either purchased new stakes in First Interstate BancSystem or increased their positions in the company during the last quarter of 2022 or first quarter of 2023. Hedge funds and institutional investors now own 77.78% of the company’s stock.
Despite this increase in ownership by hedge funds and institutional investors, several research analysts have issued warnings against investing in First Interstate BancSystem shares. StockNews.com started coverage on the shares with a “sell” rating just last week on May 18th, while Keefe Bruyette & Woods cut their price target on shares of First Interstate BancSystem from $38.00 to $33.00 and set a “market perform” rating on the stock back in April.
First Interstate BancSystem also recently announced a quarterly dividend payment to shareholders on May 18th which was issued to those recorded as shareholders on May 8th of $0.47 per share. Such dividend payments are likely to be of interest to both hedge funds seeking income-generating investments as well as individual investors looking for reliable sources of returns.
The market’s opinion on First Interstate BancSystem is reflected by its share price; Friday’s open at $23.35 was particularly low considering its market cap at $2.44 billion, PE ratio at 8.52 and beta of 0.84, indicating that it is an underperforming stock according to many analysts who have evaluated it thus far.
Looking beyond these figures indicates that there may be cause for concern going forward; following Q1 results reported by the company which showed an EPS shortfall ($0.54 compared with estimates around $0.82) and lower than average returns on equity (11.38% compared to the industry’s averaged 15.09%), some concerns have been raised over the future of First Interstate BancSystem and its ability to compete with better-performing companies within the same sector. Overall, it seems that First Interstate BancSystem may fit into a niche investment category in which hedge funds seek both immediate return through dividend payouts and long-term capital appreciation potential, while remaining wary of investing too much exposure and risk into this currently uncertain position as of May 26th, 2023.
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