Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Sandy Spring Bancorp Inc. (NASDAQ:SASR).
Sandy Spring Bancorp Inc. (NASDAQ:SASR) was in 4 hedge funds’ portfolios at the end of September, flat from the number of funds long the stock at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Premiere Global Services, Inc. (NYSE:PGI), Valhi, Inc. (NYSE:VHI), and Windstream Holdings, Inc. (NASDAQ:WIN) to gather more data points.
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Keeping this in mind, let’s take a look at the new action surrounding Sandy Spring Bancorp Inc. (NASDAQ:SASR).
What does the smart money think about Sandy Spring Bancorp Inc. (NASDAQ:SASR)?
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the previous quarter, which is bearish from our experience. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund holdings data compiled by Insider Monkey, Mark Lee’s Forest Hill Capital had the number one position in Sandy Spring Bancorp Inc. (NASDAQ:SASR), worth close to $47.6 million, comprising 4.5% of its total 13F portfolio. Coming in second is Renaissance Technologies, which held a $4.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism contain Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and .
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: AQR Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sandy Spring Bancorp Inc. (NASDAQ:SASR) but similarly valued. These stocks are Premiere Global Services, Inc. (NYSE:PGI), Valhi, Inc. (NYSE:VHI), Windstream Corporation (NASDAQ:WIN), and Universal Electronics Inc (NASDAQ:UEIC). This group of stocks’ market valuations are closest to Sandy Spring Bancorp Inc. (NASDAQ:SASR)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PGI | 16 | 72381 | 2 |
| VHI | 4 | 809 | -2 |
| WIN | 11 | 46601 | -10 |
| UEIC | 11 | 13409 | 3 |
As you can see, these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. Premiere Global Services, Inc. (NYSE:PGI) is the most popular stock in this table. On the other hand, Valhi, Inc. (NYSE:VHI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Sandy Spring Bancorp Inc. (NASDAQ:SASR) is even less popular than Valhi, Inc. (NYSE:VHI). Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
