Is Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) a bargain? The smart money is in a bullish mood. The number of long hedge fund bets rose by 1 lately.
If you’d ask most investors, hedge funds are assumed to be slow, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at present, we choose to focus on the top tier of this group, about 450 funds. It is widely believed that this group controls most of the smart money’s total asset base, and by paying attention to their highest performing picks, we have formulated a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as integral, bullish insider trading activity is a second way to parse down the marketplace. There are plenty of incentives for a corporate insider to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).
With these “truths” under our belt, it’s important to take a glance at the recent action surrounding Sun Bancorp, Inc. /NJ (NASDAQ:SNBC).
What have hedge funds been doing with Sun Bancorp, Inc. /NJ (NASDAQ:SNBC)?
Heading into Q2, a total of 7 of the hedge funds we track were long in this stock, a change of 17% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully.
Of the funds we track, Wilbur Ross’s Invesco Private Capital (WL Ross) had the most valuable position in Sun Bancorp, Inc. /NJ (NASDAQ:SNBC), worth close to $72.6 million, accounting for 7.3% of its total 13F portfolio. Coming in second is Anchorage Advisors, managed by Kevin Michael Ulrich, which held a $28.9 million position; 1.8% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Tom Brown’s Second Curve Capital, Matthew Lindenbaum’s Basswood Capital and Chuck Royce’s Royce & Associates.
Consequently, some big names have jumped into Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, created the most outsized call position in Sun Bancorp, Inc. /NJ (NASDAQ:SNBC). PEAK6 Capital Management had 0.1 million invested in the company at the end of the quarter.
What have insiders been doing with Sun Bancorp, Inc. /NJ (NASDAQ:SNBC)?
Bullish insider trading is particularly usable when the company in question has seen transactions within the past half-year. Over the last 180-day time frame, Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Sun Bancorp, Inc. /NJ (NASDAQ:SNBC). These stocks are Bryn Mawr Bank Corp. (NASDAQ:BMTC), Arrow Financial Corporation (NASDAQ:AROW), Hudson Valley Holding Corp. (NYSE:HVB), Univest Corp. of PA (NASDAQ:UVSP), and Lakeland Bancorp, Inc. (NASDAQ:LBAI). All of these stocks are in the regional – northeast banks industry and their market caps are closest to SNBC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Bryn Mawr Bank Corp. (NASDAQ:BMTC) | 5 | 1 | 6 |
| Arrow Financial Corporation (NASDAQ:AROW) | 1 | 2 | 6 |
| Hudson Valley Holding Corp. (NYSE:HVB) | 2 | 2 | 4 |
| Univest Corp. of PA (NASDAQ:UVSP) | 5 | 5 | 1 |
| Lakeland Bancorp, Inc. (NASDAQ:LBAI) | 5 | 1 | 2 |
With the returns exhibited by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading activity, and Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) shareholders fit into this picture quite nicely.
