It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in S.Y. Bancorp, Inc. (NASDAQ:SYBT).
Is S.Y. Bancorp, Inc. (NASDAQ:SYBT) a splendid investment today? Money managers are betting on the stock. The number of bullish hedge fund positions moved up by 4 recently. Our calculations also showed that SYBT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to view the new hedge fund action surrounding S.Y. Bancorp, Inc. (NASDAQ:SYBT).
What have hedge funds been doing with S.Y. Bancorp, Inc. (NASDAQ:SYBT)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in SYBT a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the number one position in S.Y. Bancorp, Inc. (NASDAQ:SYBT), worth close to $10.1 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is David Harding of Winton Capital Management, with a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of David E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to S.Y. Bancorp, Inc. (NASDAQ:SYBT), around 0.02% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to SYBT.
As one would reasonably expect, specific money managers have jumped into S.Y. Bancorp, Inc. (NASDAQ:SYBT) headfirst. Winton Capital Management, managed by David Harding, assembled the most outsized position in S.Y. Bancorp, Inc. (NASDAQ:SYBT). Winton Capital Management had $1.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.3 million position during the quarter. The following funds were also among the new SYBT investors: Ken Griffin’s Citadel Investment Group and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks similar to S.Y. Bancorp, Inc. (NASDAQ:SYBT). These stocks are Lindblad Expeditions Holdings Inc (NASDAQ:LIND), ProSight Global, Inc. (NYSE:PROS), Baytex Energy Corp (NYSE:BTE), and Systemax Inc. (NYSE:SYX). This group of stocks’ market valuations match SYBT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LIND | 18 | 167456 | 3 |
| PROS | 6 | 15728 | 6 |
| BTE | 9 | 41900 | 2 |
| SYX | 11 | 20690 | 0 |
| Average | 11 | 61444 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $16 million in SYBT’s case. Lindblad Expeditions Holdings Inc (NASDAQ:LIND) is the most popular stock in this table. On the other hand ProSight Global, Inc. (NYSE:PROS) is the least popular one with only 6 bullish hedge fund positions. S.Y. Bancorp, Inc. (NASDAQ:SYBT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on SYBT as the stock returned 12.8% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
