Is Prosperity Bancshares, Inc. (NYSE:PB) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Prosperity Bancshares, Inc. (NYSE:PB) a buy, sell, or hold? Prominent investors are taking a bullish view. The number of long hedge fund bets advanced by 3 recently. Our calculations also showed that PB isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s view the key hedge fund action regarding Prosperity Bancshares, Inc. (NYSE:PB).
What does the smart money think about Prosperity Bancshares, Inc. (NYSE:PB)?
At the end of the fourth quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in PB a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the number one position in Prosperity Bancshares, Inc. (NYSE:PB). Fisher Asset Management has a $23.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $8.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Martin Whitman’s Third Avenue Management, Dmitry Balyasny’s Balyasny Asset Management and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
As aggregate interest increased, specific money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, created the largest position in Prosperity Bancshares, Inc. (NYSE:PB). ExodusPoint Capital had $2.4 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new PB investors: Brandon Haley’s Holocene Advisors and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Prosperity Bancshares, Inc. (NYSE:PB). We will take a look at W.R. Grace & Co. (NYSE:GRA), Life Storage, Inc. (NYSE:LSI), Oshkosh Corporation (NYSE:OSK), and Axis Capital Holdings Limited (NYSE:AXS). This group of stocks’ market valuations are closest to PB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRA | 37 | 1688168 | 0 |
| LSI | 13 | 159045 | 1 |
| OSK | 29 | 384530 | -1 |
| AXS | 30 | 716155 | 9 |
| Average | 27.25 | 736975 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $737 million. That figure was $53 million in PB’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand Life Storage, Inc. (NYSE:LSI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Prosperity Bancshares, Inc. (NYSE:PB) is even less popular than LSI. Hedge funds dodged a bullet by taking a bearish stance towards PB. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately PB wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); PB investors were disappointed as the stock returned 14.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
