How do we determine whether The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds’ portfolios at the end of December. At the end of this article we will also compare NTB to other stocks including Kayne Anderson MLP/Midstream Investment Company (NYSE:KYN), TowneBank (NASDAQ:TOWN), and PTC Therapeutics, Inc. (NASDAQ:PTCT) to get a better sense of its popularity.
To most stock holders, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open today, We hone in on the elite of this club, about 750 funds. These money managers direct the majority of the hedge fund industry’s total asset base, and by tailing their matchless investments, Insider Monkey has uncovered many investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to take a peek at the recent hedge fund action surrounding The Bank of N.T. Butterfield & Son Limited (NYSE:NTB).
Hedge fund activity in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB)
At Q4’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in NTB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Southpoint Capital Advisors was the largest shareholder of The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), with a stake worth $62.7 million reported as of the end of December. Trailing Southpoint Capital Advisors was Two Sigma Advisors, which amassed a stake valued at $10.6 million. Royce & Associates, Marshall Wace LLP, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds who were dropping their entire stakes last quarter. At the top of the heap, Anand Parekh’s Alyeska Investment Group dumped the biggest position of the 700 funds followed by Insider Monkey, worth close to $24.8 million in stock, and Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management was right behind this move, as the fund dropped about $16.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) but similarly valued. These stocks are Kayne Anderson MLP/Midstream Investment Company (NYSE:KYN), TowneBank (NASDAQ:TOWN), PTC Therapeutics, Inc. (NASDAQ:PTCT), and Steelcase Inc. (NYSE:SCS). This group of stocks’ market values are closest to NTB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KYN | 4 | 5651 | 1 |
| TOWN | 8 | 31981 | -1 |
| PTCT | 25 | 434907 | -5 |
| SCS | 22 | 83481 | 3 |
| Average | 14.75 | 139005 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $114 million in NTB’s case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table. On the other hand Kayne Anderson MLP/Midstream Investment Company (NYSE:KYN) is the least popular one with only 4 bullish hedge fund positions. The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on NTB, though not to the same extent, as the stock returned 18% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
