According to a survey done by analyst Mark Fitzgibbon at Sandler O'Neill, it is found that hedge fund managers are underweight and tentative on bank stocks because they're worried that the credit market hasn't bottomed yet. Fitzgibbon said, he's been receiving a barrage of questions from institutional investors wanting to know whether other investors are getting back into bank stocks. However, a lot of institutional investors, while wanting to know what others were doing didn't want to share details of their own trading.

In the survey done on both Sandler's long-only institutional clients and the firm's hedge fund clients. The report revealed that more than two-thirds of the hedge fund managers were underweight bank stocks, while only 13% were overweight. While a third was adding bank stocks, two-thirds were keeping their positions stable. Those managers who were adding stocks mentioned they were doing so mostly when banks raised new capital.

The analyst also said, "The hedge fund community is significantly underweight bank stocks and is closely watching the group for signs of bottoming. However, they do not seem to have sufficient conviction to pile into the sector quite yet.”