Is Simmons First National Corporation (SFNC) A Good Stock To Buy?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Simmons First National Corporation (NASDAQ:SFNC).

Simmons First National Corporation (NASDAQ:SFNC) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. At the end of this article we will also compare SFNC to other stocks including New York REIT Inc (NYSE:NYRT), Shutterfly, Inc. (NASDAQ:SFLY), and Rexford Industrial Realty Inc (NYSE:REXR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to take a peek at the new action regarding Simmons First National Corporation (NASDAQ:SFNC).

How are hedge funds trading Simmons First National Corporation (NASDAQ:SFNC)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in SFNC at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the number one position in Simmons First National Corporation (NASDAQ:SFNC). According to regulatory filings, the fund has a $6.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Zebra Capital Management, led by Roger Ibbotson, which holds a $1.1 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions comprise Cliff Asness’ AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Matthew Tewksbury’s Stevens Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: McKinley 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 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Two Sigma Advisors).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Simmons First National Corporation (NASDAQ:SFNC) but similarly valued. We will take a look at New York REIT Inc (NYSE:NYRT), Shutterfly, Inc. (NASDAQ:SFLY), Rexford Industrial Realty Inc (NYSE:REXR), and LegacyTexas Financial Group Inc (NASDAQ:LTXB). All of these stocks’ market caps resemble SFNC’s market cap.

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 $206 million. That figure was $9 million in SFNC’s case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table. On the other hand Rexford Industrial Realty Inc (NYSE:REXR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Simmons First National Corporation (NASDAQ:SFNC) is even less popular than REXR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, 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.

Disclosure: none.