Is Byline Bancorp (BY) A Good Stock To Buy Now?

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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on Byline Bancorp, Inc. (NYSE:BY).

Is Byline Bancorp (BY) a good stock to buy now? Prominent investors were selling. The number of long hedge fund bets were cut by 1 recently. Byline Bancorp, Inc. (NYSE:BY) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that BY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are a lot of formulas shareholders have at their disposal to analyze stocks. A pair of the less known formulas 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 outperform the S&P 500 by a very impressive amount (see the details here).

Anton Schutz of Mendon Capital Advisors

At Insider Monkey we scour multiple sources to uncover 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 and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s take a glance at the new hedge fund action encompassing Byline Bancorp, Inc. (NYSE:BY).

How have hedgies been trading Byline Bancorp, Inc. (NYSE:BY)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BY over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Byline Bancorp, Inc. (NYSE:BY) was held by Mendon Capital Advisors, which reported holding $5.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $2.1 million position. Other investors bullish on the company included Winton Capital Management, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Byline Bancorp, Inc. (NYSE:BY), around 3.29% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to BY.

Because Byline Bancorp, Inc. (NYSE:BY) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers that decided to sell off their entire stakes heading into Q4. It’s worth mentioning that Cliff Asness’s AQR Capital Management sold off the largest position of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $0.3 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Byline Bancorp, Inc. (NYSE:BY). These stocks are McEwen Mining Inc (NYSE:MUX), Establishment Labs Holdings Inc. (NASDAQ:ESTA), QCR Holdings, Inc. (NASDAQ:QCRH), Avid Bioservices, Inc. (NASDAQ:CDMO), Napco Security Technologies Inc (NASDAQ:NSSC), MannKind Corporation (NASDAQ:MNKD), and First Financial Corp (NASDAQ:THFF). This group of stocks’ market valuations are similar to BY’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $9 million in BY’s case. Avid Bioservices, Inc. (NASDAQ:CDMO) is the most popular stock in this table. On the other hand Napco Security Technologies Inc (NASDAQ:NSSC) is the least popular one with only 2 bullish hedge fund positions. Byline Bancorp, Inc. (NYSE:BY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BY is 35. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on BY as the stock returned 41.5% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.

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