Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Cadence Bancorporation (NYSE:CADE).
Cadence Bancorporation (NYSE:CADE) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that CADE isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most market participants, hedge funds are perceived as underperforming, outdated financial vehicles of the past. While there are more than 8,000 funds trading at the moment, Our experts choose to focus on the aristocrats of this group, around 700 funds. These money managers orchestrate the lion’s share of the hedge fund industry’s total capital, and by keeping track of their unrivaled picks, Insider Monkey has identified a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s take a look at the new hedge fund action surrounding Cadence Bancorporation (NYSE:CADE).
Hedge fund activity in Cadence Bancorporation (NYSE:CADE)
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CADE over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Laurion Capital Management held the most valuable stake in Cadence Bancorporation (NYSE:CADE), which was worth $47.3 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $43 million worth of shares. Moreover, Diamond Hill Capital, Millennium Management, and Levin Capital Strategies were also bullish on Cadence Bancorporation (NYSE:CADE), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Cadence Bancorporation (NYSE:CADE). Marshall Wace LLP had $43 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also initiated a $9.1 million position during the quarter. The other funds with new positions in the stock are Simon Sadler’s Segantii Capital and Brandon Haley’s Holocene Advisors.
Let’s also examine hedge fund activity in other stocks similar to Cadence Bancorporation (NYSE:CADE). We will take a look at QTS Realty Trust Inc (NYSE:QTS), Universal Forest Products, Inc. (NASDAQ:UFPI), Ameris Bancorp (NASDAQ:ABCB), and Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). This group of stocks’ market values are similar to CADE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QTS | 19 | 393861 | 6 |
| UFPI | 18 | 79274 | 1 |
| ABCB | 13 | 192698 | 3 |
| CCO | 13 | 80607 | 1 |
| Average | 15.75 | 186610 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $323 million in CADE’s case. QTS Realty Trust Inc (NYSE:QTS) is the most popular stock in this table. On the other hand Ameris Bancorp (NASDAQ:ABCB) is the least popular one with only 13 bullish hedge fund positions. Cadence Bancorporation (NYSE:CADE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QTS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.