We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Independent Bank Corp (NASDAQ:INDB) based on that data.
Independent Bank Corp (NASDAQ:INDB) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. INDB was in 14 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 13 hedge funds in our database with INDB positions at the end of the previous quarter. Our calculations also showed that INDB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
At the moment there are tons of formulas shareholders use to size up their holdings. A couple of the best formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass the broader indices by a superb margin (see the details here).
Ken Fisher of Fisher Asset Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the latest hedge fund action encompassing Independent Bank Corp (NASDAQ:INDB).
How are hedge funds trading Independent Bank Corp (NASDAQ:INDB)?
Heading into the first quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in INDB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Independent Bank Corp (NASDAQ:INDB) was held by Fisher Asset Management, which reported holding $7.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $1.8 million position. Other investors bullish on the company included ExodusPoint Capital, Balyasny Asset Management, and AlphaCrest Capital Management. In terms of the portfolio weights assigned to each position GRT Capital Partners allocated the biggest weight to Independent Bank Corp (NASDAQ:INDB), around 0.57% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to INDB.
As industrywide interest jumped, specific money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Independent Bank Corp (NASDAQ:INDB). ExodusPoint Capital had $1.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $1.5 million position during the quarter. The following funds were also among the new INDB investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Independent Bank Corp (NASDAQ:INDB) but similarly valued. These stocks are Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), World Fuel Services Corporation (NYSE:INT), PolyOne Corporation (NYSE:POL), and Allegiant Travel Company (NASDAQ:ALGT). This group of stocks’ market valuations are similar to INDB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BHVN | 35 | 500626 | -1 |
| INT | 22 | 223464 | 3 |
| POL | 24 | 265035 | 2 |
| ALGT | 24 | 618035 | 6 |
| Average | 26.25 | 401790 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $402 million. That figure was $18 million in INDB’s case. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is the most popular stock in this table. On the other hand World Fuel Services Corporation (NYSE:INT) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Independent Bank Corp (NASDAQ:INDB) is even less popular than INT. Hedge funds dodged a bullet by taking a bearish stance towards INDB. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately INDB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); INDB investors were disappointed as the stock returned -30.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
