Does Flagstar Bank, National Association (FLG) Have a Compelling Valuation?

Black Bear Value Fund, an investment advisor, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In December, the Black Bear Value Fund returned +0.2%, bringing 2025 returns to -12.6%. The S&P 500 returned +0.1% in December and +17.9% in 2025. In a rising market environment, the Fund has lost 10-15% over the two years. The Fund does not aim to replicate the Index, so some performance variation is expected. Heading into 2026, the firm has several strong names in its portfolio, even though the market is not receptive to them currently. The firm expects a significant rerating in these holdings as they are at the end of a capital-investment cycle. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Black Bear Value Fund highlighted stocks like Flagstar Bank, National Association (NYSE:FLG). Flagstar Bank, National Association (NYSE:FLG) is a US-based banking company. On February 6, 2026, Flagstar Bank, National Association (NYSE:FLG) stock closed at $14.25 per share. One-month return of Flagstar Bank, National Association (NYSE:FLG) was 11.75%, and its shares are up 16.11% over the past twelve months. Flagstar Bank, National Association (NYSE:FLG) has a market capitalization of $5.94 billion.

Black Bear Value Fund stated the following regarding Flagstar Bank, National Association (NYSE:FLG) in its fourth quarter 2025 investor letter:

"Flagstar Bank, National Association (NYSE:FLG) is the former New York Community Bank (a mashup of Flagstar Bank, New York Community Bank and assets from Signature Bank). Like our past SHORT investments in Silicon Valley Bank and First Republic, FLG had a hole in their balance sheet (from soured multifamily and office real estate vs. long-duration securities). That is where the similarities end.

FLG raised over $1BB in additional capital, led by former Treasury Secretary Steven Mnuchin. They revamped the management team and brought in a superstar CEO in Joseph Otting who successfully turned around OneWest Bank post GFC (formerly known as IndyMac Bank). Mr. Otting and his team are my kind of managers – they are plain-spoken, hardworking and plan for the worst while hoping for the best.

The turnaround is going well, and they recently reported their first profitable quarter since the new management team took over.

The valuation is extremely compelling. At year-end the bank was trading at ~67% of a conservatively marked balance sheet. This is in contrast with similar banks (who are NOT conservatively marked) trading at 140 160% of their tangible book value. At these prices the downside seems minimal and could see this business up 45-120% over the next 1-3 years as it is more appropriately valued."

Flagstar Bank, National Association (NYSE:FLG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 36 hedge fund portfolios held Flagstar Bank, National Association (NYSE:FLG) at the end of the third quarter, the same as in the previous quarter. While we acknowledge the potential of Flagstar Bank, National Association (NYSE:FLG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.