“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Texas Capital Bancshares Inc (NASDAQ:TCBI) and see how it was affected.
Texas Capital Bancshares Inc (NASDAQ:TCBI) was in 22 hedge funds’ portfolios at the end of the third quarter of 2018. TCBI has seen an increase in hedge fund interest in recent months. There were 17 hedge funds in our database with TCBI holdings at the end of the previous quarter. Our calculations also showed that tcbi isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most stock holders, hedge funds are perceived as underperforming, old investment tools of yesteryear. While there are more than 8,000 funds in operation today, Our experts look at the elite of this group, approximately 700 funds. Most estimates calculate that this group of people oversee the lion’s share of the smart money’s total capital, and by following their highest performing investments, Insider Monkey has unsheathed a few investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s take a look at the key hedge fund action regarding Texas Capital Bancshares Inc (NASDAQ:TCBI).
How have hedgies been trading Texas Capital Bancshares Inc (NASDAQ:TCBI)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the second quarter of 2018. On the other hand, there were a total of 19 hedge funds with a bullish position in TCBI at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Millennium Management was the largest shareholder of Texas Capital Bancshares Inc (NASDAQ:TCBI), with a stake worth $201.2 million reported as of the end of September. Trailing Millennium Management was Citadel Investment Group, which amassed a stake valued at $140.2 million. Daruma Asset Management, D E Shaw, and Azora Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized call position in Texas Capital Bancshares Inc (NASDAQ:TCBI). Balyasny Asset Management had $6.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $2.9 million position during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Noam Gottesman’s GLG Partners.
Let’s now review hedge fund activity in other stocks similar to Texas Capital Bancshares Inc (NASDAQ:TCBI). We will take a look at GDS Holdings Limited (NASDAQ:GDS), On ASGN Incorporated (NYSE:ASGN), Vipshop Holdings Limited (NYSE:VIPS), and Evercore Inc. (NYSE:EVR). All of these stocks’ market caps are closest to TCBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GDS | 26 | 670834 | 7 |
| ASGN | 18 | 70864 | 4 |
| VIPS | 22 | 130110 | -5 |
| EVR | 22 | 273405 | 0 |
| Average | 22 | 286303 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $514 million in TCBI’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand On Assignment, Inc. (NYSE:ASGN) is the least popular one with only 18 bullish hedge fund positions. Texas Capital Bancshares Inc (NASDAQ:TCBI) 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. In this regard GDS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
