We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Banner Corporation (NASDAQ:BANR).
Banner Corporation (NASDAQ:BANR) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Our calculations also showed that BANR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the 21st century investor’s toolkit there are a large number of tools shareholders put to use to value stocks. Some of the less utilized tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outclass their index-focused peers by a healthy amount (see the details here).
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the recent hedge fund action surrounding Banner Corporation (NASDAQ:BANR).
Hedge fund activity in Banner Corporation (NASDAQ:BANR)
At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the third quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in BANR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Banner Corporation (NASDAQ:BANR). Citadel Investment Group has a $29.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Forest Hill Capital, led by Mark Lee, holding a $13.1 million position; 4.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish comprise Israel Englander’s Millennium Management, Noam Gottesman’s GLG Partners and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Banner Corporation (NASDAQ:BANR), around 4.32% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, setting aside 0.19 percent of its 13F equity portfolio to BANR.
Because Banner Corporation (NASDAQ:BANR) has experienced a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of hedgies that elected to cut their full holdings in the third quarter. At the top of the heap, Fred Cummings’s Elizabeth Park Capital Management said goodbye to the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $10 million in stock. Mika Toikka’s fund, AlphaCrest Capital Management, also said goodbye to its stock, about $0.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Banner Corporation (NASDAQ:BANR) but similarly valued. We will take a look at ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Papa John’s International, Inc. (NASDAQ:PZZA), The Geo Group, Inc. (NYSE:GEO), and Essential Properties Realty Trust, Inc. (NYSE:EPRT). This group of stocks’ market valuations are similar to BANR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SFBS | 9 | 11317 | 1 |
| PZZA | 28 | 352372 | 3 |
| GEO | 22 | 104432 | -1 |
| EPRT | 9 | 20912 | -7 |
| Average | 17 | 122258 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $71 million in BANR’s case. Papa John’s International, Inc. (NASDAQ:PZZA) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 9 bullish hedge fund positions. Banner Corporation (NASDAQ:BANR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately BANR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BANR investors were disappointed as the stock returned -38.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
