Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Signature Bank (NASDAQ:SBNY) based on that data.
Is Signature Bank (NASDAQ:SBNY) a healthy stock for your portfolio? The best stock pickers were taking an optimistic view. The number of long hedge fund positions rose by 3 recently. Signature Bank (NASDAQ:SBNY) was in 43 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 40. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SBNY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Emanuel Friedman of EJF Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a peek at the recent hedge fund action encompassing Signature Bank (NASDAQ:SBNY).
Do Hedge Funds Think SBNY Is A Good Stock To Buy Now?
At Q2’s end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SBNY over the last 24 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.
The largest stake in Signature Bank (NASDAQ:SBNY) was held by Citadel Investment Group, which reported holding $170.5 million worth of stock at the end of June. It was followed by Point72 Asset Management with a $87.4 million position. Other investors bullish on the company included Samlyn Capital, First Pacific Advisors LLC, and EJF Capital. In terms of the portfolio weights assigned to each position Toscafund Asset Management allocated the biggest weight to Signature Bank (NASDAQ:SBNY), around 8.47% of its 13F portfolio. Engle Capital is also relatively very bullish on the stock, setting aside 6.44 percent of its 13F equity portfolio to SBNY.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Kingdon Capital, managed by Mark Kingdon, assembled the biggest position in Signature Bank (NASDAQ:SBNY). Kingdon Capital had $12.6 million invested in the company at the end of the quarter. Zach Petrone’s Highside Global Management also made a $12.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Ravi Chopra’s Azora Capital, Dmitry Balyasny’s Balyasny Asset Management, and Qing Li’s Sciencast Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Signature Bank (NASDAQ:SBNY) but similarly valued. We will take a look at WestRock Company (NYSE:WRK), GoodRx Holdings, Inc. (NASDAQ:GDRX), Wynn Resorts, Limited (NASDAQ:WYNN), ABIOMED, Inc. (NASDAQ:ABMD), Oak Street Health, Inc. (NYSE:OSH), Aluminum Corp. of China Limited (NYSE:ACH), and The J.M. Smucker Company (NYSE:SJM). This group of stocks’ market caps are closest to SBNY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WRK | 32 | 572106 | 5 |
| GDRX | 28 | 635923 | 4 |
| WYNN | 37 | 712498 | -12 |
| ABMD | 24 | 899188 | -2 |
| OSH | 33 | 561397 | 2 |
| ACH | 4 | 8000 | 1 |
| SJM | 34 | 580514 | 1 |
| Average | 27.4 | 567089 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $567 million. That figure was $787 million in SBNY’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Signature Bank (NASDAQ:SBNY) is more popular among hedge funds. Our overall hedge fund sentiment score for SBNY is 88. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 22.9% in 2021 through October 1st but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on SBNY as the stock returned 16.7% since the end of June (through 10/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
