In this article we will check out the progression of hedge fund sentiment towards SVB Financial Group (NASDAQ:SIVB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
SVB Financial Group (NASDAQ:SIVB) has seen an increase in enthusiasm from smart money in recent months. SVB Financial Group (NASDAQ:SIVB) was in 49 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SIVB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are numerous indicators shareholders use to assess stocks. A duo of the less known indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the market by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Emanuel Friedman of EJF Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. Keeping this in mind we’re going to take a peek at the latest hedge fund action regarding SVB Financial Group (NASDAQ:SIVB).
Do Hedge Funds Think SIVB Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of 58% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SIVB over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of SVB Financial Group (NASDAQ:SIVB), with a stake worth $330.2 million reported as of the end of March. Trailing Fisher Asset Management was Citadel Investment Group, which amassed a stake valued at $220.1 million. Diamond Hill Capital, AQR Capital Management, and Millennium Management 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 Strycker View Capital allocated the biggest weight to SVB Financial Group (NASDAQ:SIVB), around 3.49% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, earmarking 2.48 percent of its 13F equity portfolio to SIVB.
Now, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in SVB Financial Group (NASDAQ:SIVB). Citadel Investment Group had $220.1 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $31.6 million investment in the stock during the quarter. The other funds with brand new SIVB positions are Joseph Samuels’s Islet Management, Emanuel J. Friedman’s EJF Capital, and Ravi Chopra’s Azora Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SVB Financial Group (NASDAQ:SIVB) but similarly valued. These stocks are MPLX LP (NYSE:MPLX), CBRE Group, Inc. (NYSE:CBRE), Royalty Pharma Plc (NASDAQ:RPRX), Ecopetrol S.A. (NYSE:EC), Magna International Inc. (NYSE:MGA), BioNTech SE (NASDAQ:BNTX), and XPeng Inc. (NYSE:XPEV). This group of stocks’ market values match SIVB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MPLX | 8 | 136195 | -5 |
| CBRE | 30 | 2600509 | -1 |
| RPRX | 26 | 1835240 | 8 |
| EC | 8 | 98728 | 1 |
| MGA | 34 | 671764 | -4 |
| BNTX | 18 | 172627 | 1 |
| XPEV | 19 | 976276 | -11 |
| Average | 20.4 | 927334 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $927 million. That figure was $1213 million in SIVB’s case. Magna International Inc. (NYSE:MGA) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks SVB Financial Group (NASDAQ:SIVB) is more popular among hedge funds. Our overall hedge fund sentiment score for SIVB is 90. 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 gained 17.4% in 2021 through June 18th and still managed to beat the market by 6.1 percentage points. Hedge funds were also right about betting on SIVB, though not to the same extent, as the stock returned 7.6% since the end of March (through June 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
