Is Yadkin Financial Corp (YDKN) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Yadkin Financial Corp (NYSE:YDKN) .

Is Yadkin Financial Corp (NYSE:YDKN) going to take off soon? Hedge funds are indeed actually taking a pessimistic view. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings contracted by 2 recently. There were 12 hedge funds in our database with YDKN holdings at the end of September. 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 Albany International Corp. (NYSE:AIN), KB Home (NYSE:KBH), and Scholastic Corp (NASDAQ:SCHL) to gather more data points.

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, let’s take a look at the recent action surrounding Yadkin Financial Corp (NASDAQ:YDKN).

How are hedge funds trading Yadkin Financial Corp (NYSE:YDKN)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards YDKN over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Magnetar Capital, led by Alec Litowitz and Ross Laser, holds the largest position in Yadkin Financial Corp (NYSE:YDKN). Magnetar Capital has a $35.9 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, with a $16.4 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish contain Paul Magidson, Jonathan Cohen. And Ostrom Enders’ Castine Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Matthew Lindenbaum’s Basswood Capital. 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.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that got rid of their entire stakes in the stock during the third quarter. Intriguingly, Robert I. Usdan and Wayne K. Goldstein’s Endicott Management got rid of the biggest investment of all the investors watched by Insider Monkey, worth about $50.6 million in stock. Emanuel J. Friedman’s fund, EJF Capital, also said goodbye to its stock, about $25.1 million worth.

Let’s now take a look at hedge fund activity in other stocks similar to Yadkin Financial Corp (NYSE:YDKN). These stocks are Albany International Corp. (NYSE:AIN), KB Home (NYSE:KBH), Scholastic Corp (NASDAQ:SCHL), and Gannett Co., Inc. (NYSE:GCI). This group of stocks’ market caps resemble YDKN’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $88 million in YDKN’s case. KB Home (NYSE:KBH) is the most popular stock in this table. On the other hand Albany International Corp. (NYSE:AIN) is the least popular one with only 11 bullish hedge fund positions. Yadkin Financial Corp (NYSE:YDKN) 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 KBH might be a better candidate to consider taking a long position in.

Disclosure: None