Hedge Funds Are Betting On Valley National Bancorp (VLY)

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Valley National Bancorp (NYSE:VLY) has experienced an increase in enthusiasm from smart money of late. There were 13 hedge funds in our database with VLY positions 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 Avon Products, Inc. (NYSE:AVP), Genworth Financial Inc (NYSE:GNW), and Primerica, Inc. (NYSE:PRI) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, we’re going to analyze the key action regarding Valley National Bancorp (NYSE:VLY).

What does the smart money think about Valley National Bancorp (NYSE:VLY)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, up 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VLY over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Valley National Bancorp (NYSE:VLY). According to regulatory filings, the fund has a $33.4 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Tudor Investment Corp, led by Paul Tudor Jones, which oversees an $11 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism consist of Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Gregg J. Powers’s Private Capital Management and Martin Whitman’s Third Avenue Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, key hedge funds have jumped into Valley National Bancorp (NYSE:VLY) headfirst. Folger Hill Asset Management, led by Solomon Kumin, created the most outsized position in Valley National Bancorp (NYSE:VLY). The fund reportedly had $2.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The other funds with brand new VLY positions are Matthew Hulsizer’s PEAK6 Capital Management and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s check out hedge fund activity in other stocks similar to Valley National Bancorp (NYSE:VLY). We will take a look at Avon Products, Inc. (NYSE:AVP), Genworth Financial Inc (NYSE:GNW), Primerica, Inc. (NYSE:PRI), and Minerals Technologies Inc (NYSE:MTX). This group of stocks’ market valuations resemble VLY’s market valuation.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was just $75 million in VLY’s case. Avon Products, Inc. (NYSE:AVP) is the most popular stock in this table. On the other hand Primerica, Inc. (NYSE:PRI) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Valley National Bancorp (NYSE:VLY) is even less popular than PRI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.