Here is What Hedge Funds Think About Altabancorp (ALTA)

In this article we are going to use hedge fund sentiment as a tool and determine whether Altabancorp (NASDAQ:ALTA) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Altabancorp (NASDAQ:ALTA) has experienced a decrease in support from the world’s most elite money managers recently. Altabancorp (NASDAQ:ALTA) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that ALTA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Emanuel Friedman of EJF Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding Altabancorp (NASDAQ:ALTA).

Do Hedge Funds Think ALTA Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ALTA over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Lee’s Forest Hill Capital has the most valuable position in Altabancorp (NASDAQ:ALTA), worth close to $14.3 million, accounting for 4.3% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $5.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that are bullish consist of Ric Dillon’s Diamond Hill Capital, Emanuel J. Friedman’s EJF Capital and . In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Altabancorp (NASDAQ:ALTA), around 4.28% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, earmarking 0.27 percent of its 13F equity portfolio to ALTA.

Seeing as Altabancorp (NASDAQ:ALTA) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedgies that decided to sell off their positions entirely heading into Q2. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, worth close to $0.7 million in stock. David Harding’s fund, Winton Capital Management, also dropped its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds heading into Q2.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Altabancorp (NASDAQ:ALTA) but similarly valued. We will take a look at First Mid Bancshares, Inc. (NASDAQ:FMBH), Harmonic Inc (NASDAQ:HLIT), VBI Vaccines, Inc. (NASDAQ:VBIV), CAI International Inc (NYSE:CAI), Corporacion America Airports SA (NYSE:CAAP), Community Trust Bancorp, Inc. (NASDAQ:CTBI), and Karyopharm Therapeutics Inc (NASDAQ:KPTI). This group of stocks’ market valuations match ALTA’s market valuation.

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As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $28 million in ALTA’s case. Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the most popular stock in this table. On the other hand First Mid Bancshares, Inc. (NASDAQ:FMBH) is the least popular one with only 2 bullish hedge fund positions. Altabancorp (NASDAQ:ALTA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALTA is 25.4. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on ALTA as the stock returned 8.9% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.