By: Manisha Sethi Sep. 12, 2018

FJ Capital Management LLC reported its SEC 13F filings for the first quarter of 2018 on May 14. Its portfolio is valued at $812.18 million. The firm invested in 24 new stocks and closed out positions in 20 stocks. Its highest holding is 23,95,300 shares in Veritex Holdings Inc. (VBTX). FJ Capital Management LLC is based in McLean, Virginia, and was founded in 2007 by Martin Friedman and Andrew Jose. The SEC-registered investment advisor majorly invests in the financial sector, with focus on the community and regional banking sector. In addition, it manages client-focused equity portfolios.

According to a study conducted by Raltin, 63% of FJ Capital Management’s new purchases outperform the S&P 500. On the other hand, 15% or about 14 new stock purchases (between Q1 2014 and Q1 2018) underperform the S&P 500 by more than 10%. Only 4 out of 92 new purchases underperform the S&P 500 by more than 20%. A detailed description of Raltin’s methodology can be found here. The following table mentions the various categories of new purchases relative to the performance of S&P 500.

S&P outperformance categoryNumber of new stock purchasesTotal new purchases (%)
10 to 20%2021.74
0 to 10%1111.96
-10 to 0%2021.74
-20 to -10%1010.87
Total Stocks92


Of the 24 new stocks purchased this quarter, Opus Bank (OPB) accounts for 1% of the portfolio. The table below elaborates on  the new purchases as well as the number of shares and holding value.

StocksNumber of sharesHolding value ($1,000)
Opus Bank (OPB)317,0008,175
FCB Financial Holdings (FCB)152,2007,777
CenterState Banks Inc. (CSFL)222,0005,591
Charter Financial Corp. (CHFN)270,5005,337
Bridgewater Bancshares, Inc. (BWB)278,3003,272
SB Financial Group, Inc. (SBFG)171,3002,913
Kearny Financial Corp (KRNY)223,1002,844
United Financial Bancorp, Inc. (UBNK)110,0001,615
OP Bancorp (OPBK)72,300830
Aspen Insurance Holdings, Inc. (AHL)6,400286
Comerica, Inc. (CMA)3,000286
Essent Group Ltd. (ESNT)6,700285
OneMain Holdings, Inc. (OMF)9,500284
Health Insurance Innovations, Inc. (HIIQ)9,600279
Zions Bancorporation (ZION)5,100267
Heritage Financial Corp. (HFWA)8,000245
Voya Financial, Inc. (VOYA)4,700238
Solar Capital Ltd. (SLRC)11,300229
TPG Specialty Lending, Inc. (TSLX)12,800228
Visa, Inc.1,800217
American Homes 4 Rent (AMH)10,500210
Artisan Partners Asset Management, Inc. (APAM)6,,300210
Redwood Trust, Inc. (RWT)12,800198
Santander Consumer USA Holdings, Inc. (SC)10,000164

The following table presents the investor’s  portfolio value for the five quarters starting from Q1 2017 to Q1 2016 and the top holdings in each quarter that outperform S&P 500.

PeriodTotal portfolio value ($Mn)Top holdings (ticker, % of IRR difference from S&P 500)
Q1 2017726.61Health Insurance Innovations, Inc. (HIIQ, 69.26), Opus Bank (OPB, 27.42), MGIC Investment Corp. (MTG, 16.76)
Q4 2016673.43Two Harbors Investment Corp. (TWO, 67.34), Tri Pointe Homes, Inc. (TPH, 36.85), First Bancshares, Inc. (The) (FBMS, 5.0)
Q3 2016522.15FB Financial Corporation (FBK, 71.04), Evans Bancorp, Inc. (EVBN, 41.95), Old Point Financial Corp. (OPOF, 40.82)
Q2 2016504.45FCB Financial Holdings, Inc. (FCB, 25.01), HomeStreet, Inc. (HMST, 23.48), Old National Bancorp (ONB, 22.24)
Q1 2016504.68Univest Corp. of Pennsylvania (UVSP, 18.05)

Clearly, Health Insurance Innovations, Inc.; Two Harbors Investment Corp.; and FB Financial Corporation outperform S&P 500 by more than 50%.