With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Silvergate Capital Corporation (NYSE:SI).
Is Silvergate Capital Corporation (NYSE:SI) a superb stock to buy now? The smart money was in an optimistic mood. The number of long hedge fund positions inched up by 1 in recent months. Silvergate Capital Corporation (NYSE:SI) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 31 hedge funds in our database with SI positions at the end of the second quarter.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s go over the key hedge fund action surrounding Silvergate Capital Corporation (NYSE:SI).
Do Hedge Funds Think SI Is A Good Stock To Buy Now?
At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SI over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, EJF Capital was the largest shareholder of Silvergate Capital Corporation (NYSE:SI) , with a stake worth $134.6 million reported as of the end of September. Trailing EJF Capital was Zevenbergen Capital Investments, which amassed a stake valued at $101.8 million. ARK Investment Management, Park West Asset Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Silvergate Capital Corporation (NYSE:SI) , around 11.75% of its 13F portfolio. Zevenbergen Capital Investments is also relatively very bullish on the stock, dishing out 1.93 percent of its 13F equity portfolio to SI.
Consequently, specific money managers were leading the bulls’ herd. Granite Point Capital, managed by Warren Lammert, created the biggest position in Silvergate Capital Corporation (NYSE:SI) . Granite Point Capital had $2.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $1.5 million position during the quarter. The other funds with brand new SI positions are Karim Abbadi and Edward McBride’s Centiva Capital and Peter Algert’s Algert Global.
Let’s also examine hedge fund activity in other stocks similar to Silvergate Capital Corporation (NYSE:SI) . These stocks are CryoPort, Inc. (NASDAQ:CYRX), Blend Labs Inc. (NYSE:BLND), Axos Financial, Inc. (NYSE:AX), Liberty Latin America Ltd. (NASDAQ:LILAK), Chindata Group Holdings Limited (NASDAQ:CD), AdaptHealth Corp. (NASDAQ:AHCO), and Liberty Latin America Ltd. (NASDAQ:LILA). All of these stocks’ market caps resemble SI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CYRX | 18 | 163168 | -4 |
| BLND | 19 | 487745 | 19 |
| AX | 12 | 39551 | 1 |
| LILAK | 28 | 522455 | 1 |
| CD | 13 | 126458 | 3 |
| AHCO | 21 | 471946 | 1 |
| LILA | 14 | 130595 | -2 |
| Average | 17.9 | 277417 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $277 million. That figure was $516 million in SI’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand Axos Financial, Inc. (NYSE:AX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Silvergate Capital Corporation (NYSE:SI) is more popular among hedge funds. Our overall hedge fund sentiment score for SI is 86. 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 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on SI as the stock returned 77% since the end of September (through 11/30) 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.
