The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Valley National Bancorp (NASDAQ:VLY) based on those filings.
Is VLY a good stock to buy now? Valley National Bancorp (NASDAQ:VLY) investors should be aware of an increase in activity from the world’s largest hedge funds recently. Valley National Bancorp (NASDAQ:VLY) was in 21 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 24. Our calculations also showed that VLY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Lawrence Seidman of Seidman Investment Partnership
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a gander at the fresh hedge fund action encompassing Valley National Bancorp (NASDAQ:VLY).
Do Hedge Funds Think VLY Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VLY over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Holocene Advisors was the largest shareholder of Valley National Bancorp (NASDAQ:VLY), with a stake worth $13.3 million reported as of the end of September. Trailing Holocene Advisors was Royce & Associates, which amassed a stake valued at $10.8 million. AQR Capital Management, Hourglass Capital, and Tudor Investment Corp were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to Valley National Bancorp (NASDAQ:VLY), around 1.03% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, setting aside 0.93 percent of its 13F equity portfolio to VLY.
Consequently, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Valley National Bancorp (NASDAQ:VLY). Marshall Wace LLP had $1.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $1 million investment in the stock during the quarter. The following funds were also among the new VLY investors: Lawrence Seidman’s Seidman Investment Partnership, Renee Yao’s Neo Ivy Capital, and Minhua Zhang’s Weld Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Valley National Bancorp (NASDAQ:VLY). We will take a look at eXp World Holdings, Inc. (NASDAQ:EXPI), American States Water Co (NYSE:AWR), Bank OZK (NASDAQ:OZK), Synaptics Incorporated (NASDAQ:SYNA), WPX Energy Inc (NYSE:WPX), AMN Healthcare Services Inc (NYSE:AMN), and Advanced Disposal Services, Inc. (NYSE:ADSW). All of these stocks’ market caps are similar to VLY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXPI | 14 | 111222 | 3 |
| AWR | 21 | 54964 | 1 |
| OZK | 20 | 178260 | 3 |
| SYNA | 23 | 370429 | -5 |
| WPX | 29 | 225279 | -8 |
| AMN | 16 | 72881 | -5 |
| ADSW | 22 | 799197 | -3 |
| Average | 20.7 | 258890 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $259 million. That figure was $39 million in VLY’s case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand eXp World Holdings, Inc. (NASDAQ:EXPI) is the least popular one with only 14 bullish hedge fund positions. Valley National Bancorp (NASDAQ:VLY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VLY is 58.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on VLY as the stock returned 41.9% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
