Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cadence Bancorporation (NYSE:CADE).
Is CADE a good stock to buy now? Cadence Bancorporation (NYSE:CADE) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 29. CADE shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 21 hedge funds in our database with CADE holdings at the end of June. Our calculations also showed that CADE 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 eyes of most traders, hedge funds are perceived as slow, old investment vehicles of the past. While there are more than 8000 funds with their doors open today, Our experts look at the crème de la crème of this club, around 850 funds. These hedge fund managers handle most of the hedge fund industry’s total asset base, and by observing their first-class investments, Insider Monkey has found several investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Ric Dillon of Diamond Hill Capital
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. Keeping this in mind we’re going to take a gander at the key hedge fund action regarding Cadence Bancorporation (NYSE:CADE).
Do Hedge Funds Think CADE Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in CADE 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.
Of the funds tracked by Insider Monkey, Ravi Chopra’s Azora Capital has the biggest position in Cadence Bancorporation (NYSE:CADE), worth close to $20.2 million, accounting for 2.5% of its total 13F portfolio. The second largest stake is held by Diamond Hill Capital, managed by Ric Dillon, which holds a $16.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Cadence Bancorporation (NYSE:CADE), around 3.51% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, designating 3.12 percent of its 13F equity portfolio to CADE.
As aggregate interest increased, key money managers have jumped into Cadence Bancorporation (NYSE:CADE) headfirst. Paloma Partners, managed by Donald Sussman, created the biggest position in Cadence Bancorporation (NYSE:CADE). Paloma Partners had $0.3 million invested in the company at the end of the quarter. Karim Abbadi and Edward McBride’s Centiva Capital also initiated a $0.1 million position during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cadence Bancorporation (NYSE:CADE) but similarly valued. These stocks are The Pennant Group, Inc. (NASDAQ:PNTG), Linx S.A. (NYSE:LINX), Kaman Corporation (NYSE:KAMN), NexPoint Residential Trust Inc (NYSE:NXRT), Deluxe Corporation (NYSE:DLX), Atkore International Group Inc. (NYSE:ATKR), and Karyopharm Therapeutics Inc (NASDAQ:KPTI). All of these stocks’ market caps resemble CADE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNTG | 15 | 30509 | 5 |
| LINX | 5 | 33977 | 2 |
| KAMN | 12 | 138073 | -1 |
| NXRT | 9 | 69227 | -4 |
| DLX | 20 | 69029 | 2 |
| ATKR | 17 | 60246 | 3 |
| KPTI | 21 | 325726 | 0 |
| Average | 14.1 | 103827 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $111 million in CADE’s case. Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the most popular stock in this table. On the other hand Linx S.A. (NYSE:LINX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Cadence Bancorporation (NYSE:CADE) is more popular among hedge funds. Our overall hedge fund sentiment score for CADE is 78.8. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on CADE as the stock returned 73% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
