Hedge Funds Are Betting On Independent Bank Corp (INDB)

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Is Independent Bank Corp (NASDAQ:INDB) a bargain? Investors who are in the know are taking a bullish view. The number of bullish hedge fund bets inched up by 3 in recent months. INDB was in an 8 hedge funds’ portfolios at the end of the third quarter of 2015. There were 5 hedge funds in our database with INDB holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as WesBanco, Inc. (NASDAQ:WSBC), MedAssets, Inc. (NASDAQ:MDAS), and Tumi Holdings Inc (NYSE:TUMI) to gather more data points.

In the financial world there are dozens of formulas shareholders can use to grade publicly traded companies. A pair of the most useful formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the S&P 500 by a very impressive amount (see the details here).

With all of this in mind, let’s take a peek at the latest action surrounding Independent Bank Corp (NASDAQ:INDB).

Hedge fund activity in Independent Bank Corp (NASDAQ:INDB)

At the end of the third quarter, a total of an 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Bernard Horn’s Polaris Capital Management has the biggest position in Independent Bank Corp (NASDAQ:INDB), worth close to $15.1 million, comprising 1.8% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $5.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Fisher Asset Management, managed by Ken Fisher, established the most valuable position in Independent Bank Corp (NASDAQ:INDB). Fisher Asset Management had $2.8 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.3 million position during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Independent Bank Corp (NASDAQ:INDB). These stocks are WesBanco, Inc. (NASDAQ:WSBC), MedAssets, Inc. (NASDAQ:MDAS), Tumi Holdings Inc (NYSE:TUMI), and Penumbra Inc (NYSE:PEN). This group of stocks’ market valuations resemble INDB’s market valuation.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $132 million, significantly above the $26 million in INDB’s case. MedAssets, Inc. (NASDAQ:MDAS) is the most popular stock in this table and WesBanco, Inc. (NASDAQ:WSBC) is the least popular one with only 7 bullish hedge fund positions. Independent Bank Corp (NASDAQ:INDB) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MDAS might be a better candidate to consider a long position.