“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on International Bancshares Corp (NASDAQ:IBOC) in order to identify whether reputable and successful top money managers continue to believe in its potential.
International Bancshares Corp (NASDAQ:IBOC) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. Our calculations also showed that IBOC isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to go over the fresh hedge fund action encompassing International Bancshares Corp (NASDAQ:IBOC).
What have hedge funds been doing with International Bancshares Corp (NASDAQ:IBOC)?
Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IBOC over the last 15 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Polaris Capital Management, managed by Bernard Horn, holds the most valuable position in International Bancshares Corp (NASDAQ:IBOC). Polaris Capital Management has a $47.1 million position in the stock, comprising 2% of its 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $42.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism encompass Ravi Chopra’s Azora Capital, Cliff Asness’s AQR Capital Management and Dmitry Balyasny’s Balyasny Asset Management.
Since International Bancshares Corp (NASDAQ:IBOC) has experienced a decline in interest from the smart money, we can see that there was a specific group of fund managers that slashed their entire stakes last quarter. Interestingly, Benjamin A. Smith’s Laurion Capital Management dropped the biggest investment of all the hedgies watched by Insider Monkey, totaling an estimated $0.8 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund dropped about $0.8 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as International Bancshares Corp (NASDAQ:IBOC) but similarly valued. These stocks are Meredith Corporation (NYSE:MDP), First Bancorp (NYSE:FBP), Cirrus Logic, Inc. (NASDAQ:CRUS), and QTS Realty Trust Inc (NYSE:QTS). This group of stocks’ market valuations match IBOC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDP | 11 | 294686 | -1 |
| FBP | 18 | 246590 | -2 |
| CRUS | 17 | 226684 | -3 |
| QTS | 22 | 371693 | 6 |
| Average | 17 | 284913 | 0 |
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 $285 million. That figure was $151 million in IBOC’s case. QTS Realty Trust Inc (NYSE:QTS) is the most popular stock in this table. On the other hand Meredith Corporation (NYSE:MDP) is the least popular one with only 11 bullish hedge fund positions. International Bancshares Corp (NASDAQ:IBOC) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately IBOC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IBOC investors were disappointed as the stock returned -1.6% 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
