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.
Is Suffolk Bancorp (NASDAQ:SUBK) the right pick for your portfolio? The smart money is buying. The number of bullish hedge fund bets went up by 1 lately. SUBK was in 10 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with SUBK holdings at the end of the previous quarter. At the end of this article we will also compare SUBK to other stocks, including Xueda Education Group (ADR) (NYSE:XUE), Arlington Asset Investment Corp (NYSE:AI), and Wausau Paper Corp. (NYSE:WPP) to get a better sense of its popularity.
Follow Suffolk Bancorp (NASDAQ:SCNB)
Follow Suffolk Bancorp (NASDAQ:SCNB)
If you’d ask most shareholders, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds trading at the moment, Our researchers look at the masters of this group, around 700 funds. It is estimated that this group of investors preside over bulk of all hedge funds’ total asset base, and by paying attention to their best picks, Insider Monkey has figured out a number of investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to take a peek at the fresh action encompassing Suffolk Bancorp (NASDAQ:SUBK).
How have hedgies been trading Suffolk Bancorp (NASDAQ:SUBK)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 11% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Basswood Capital, managed by Matthew Lindenbaum, holds the biggest position in Suffolk Bancorp (NASDAQ:SUBK). The fund reportedly holds a $31.8 million position in the stock, comprising 1.6% of its 13F portfolio. The second most bullish fund manager is Emanuel J. Friedman of EJF Capital, with a $12.6 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining peers that are bullish consist of Jim Simons’s Renaissance Technologies, Neil Chriss’s Hutchin Hill Capital and Fred Cummings’s Elizabeth Park Capital Management.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the biggest position in Suffolk Bancorp (NASDAQ:SUBK). worth an estimated $0.4 million at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Suffolk Bancorp (NASDAQ:SUBK). These stocks are Xueda Education Group (ADR) (NYSE:XUE), Arlington Asset Investment Corp (NYSE:AI), Wausau Paper Corp. (NYSE:WPP), and Vimicro International Corporation (ADR) (NASDAQ:VIMC). This group of stocks’ market valuations resemble SUBK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XUE | 9 | 21375 | 3 |
| AI | 7 | 7147 | 0 |
| WPP | 17 | 116012 | 7 |
| VIMC | 5 | 9188 | 3 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $60 million in SUBK’s case. Wausau Paper Corp. (NYSE:WPP) is leading the pack, while Vimicro International Corporation (ADR) (NASDAQ:VIMC) is the outsider with only 5 bullish hedge fund positions. Suffolk Bancorp (NASDAQ:SUBK) 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 WPP might be a better candidate to consider a long position.
