The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Texas Capital Bancshares Inc (NASDAQ:TCBI).
Hedge fund interest in Texas Capital Bancshares Inc (NASDAQ:TCBI) shares was flat at the end of last quarter. This is usually a negative indicator. 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 CenterState Banks Inc (NASDAQ:CSFL), WNS (Holdings) Limited (NYSE:WNS), and Everbridge, Inc. (NASDAQ:EVBG) to gather more data points. Our calculations also showed that TCBI isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are dozens of signals stock traders use to grade their stock investments. Two of the less utilized signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outperform the S&P 500 by a very impressive margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to analyze the key hedge fund action regarding Texas Capital Bancshares Inc (NASDAQ:TCBI).
How have hedgies been trading Texas Capital Bancshares Inc (NASDAQ:TCBI)?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TCBI over the last 16 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one position in Texas Capital Bancshares Inc (NASDAQ:TCBI), worth close to $104.7 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, led by D. E. Shaw, holding a $43 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of David E. Winebrenner’s Spindletop Capital, Ken Fisher’s Fisher Asset Management and Ravi Chopra’s Azora Capital.
Since Texas Capital Bancshares Inc (NASDAQ:TCBI) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of money managers that slashed their entire stakes in the second quarter. At the top of the heap, Matthew Lindenbaum’s Basswood Capital dropped the largest stake of the 750 funds followed by Insider Monkey, comprising an estimated $12.5 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $6.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Texas Capital Bancshares Inc (NASDAQ:TCBI). We will take a look at CenterState Banks Inc (NASDAQ:CSFL), WNS (Holdings) Limited (NYSE:WNS), Everbridge, Inc. (NASDAQ:EVBG), and Proto Labs Inc (NYSE:PRLB). This group of stocks’ market caps are similar to TCBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSFL | 15 | 103667 | -1 |
| WNS | 16 | 205494 | 1 |
| EVBG | 28 | 537005 | -2 |
| PRLB | 9 | 22516 | -2 |
| Average | 17 | 217171 | -1 |
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 $217 million. That figure was $238 million in TCBI’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Proto Labs Inc (NYSE:PRLB) is the least popular one with only 9 bullish hedge fund positions. Texas Capital Bancshares Inc (NASDAQ:TCBI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TCBI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TCBI were disappointed as the stock returned -10.9% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
