Should I Buy The Bank of N.T. Butterfield & Son Limited (NTB)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) changed recently.

Is The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) worth your attention right now? Money managers were becoming more confident. The number of bullish hedge fund bets rose by 1 lately. The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 26. Our calculations also showed that NTB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 16 hedge funds in our database with NTB holdings at the end of December.

At the moment there are plenty of signals market participants employ to evaluate stocks. A couple of the less utilized signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best money managers can trounce the broader indices by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Robert Atchinson of Adage Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind we’re going to check out the new hedge fund action encompassing The Bank of N.T. Butterfield & Son Limited (NYSE:NTB).

Do Hedge Funds Think NTB Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the fourth quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in NTB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Royce & Associates held the most valuable stake in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), which was worth $31.3 million at the end of the fourth quarter. On the second spot was Adage Capital Management which amassed $20.6 million worth of shares. Prospector Partners, D E Shaw, and Polar Capital 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 Prospector Partners allocated the biggest weight to The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), around 0.91% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, setting aside 0.7 percent of its 13F equity portfolio to NTB.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, assembled the most outsized position in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB). Tudor Investment Corp had $1.8 million invested in the company at the end of the quarter. Joseph P. Colmery and Steven J. Didion’s JCSD Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Donald Sussman’s Paloma Partners.

Let’s check out hedge fund activity in other stocks similar to The Bank of N.T. Butterfield & Son Limited (NYSE:NTB). We will take a look at NANO-X IMAGING LTD (NASDAQ:NNOX), Empire State Realty Trust Inc (NYSE:ESRT), Immunocore Holdings plc (NASDAQ:IMCR), Genetron Holdings Limited (NASDAQ:GTH), Repay Holdings Corporation (NASDAQ:RPAY), eHealth, Inc. (NASDAQ:EHTH), and Eldorado Gold Corp (NYSE:EGO). This group of stocks’ market values are closest to NTB’s market value.

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As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $199 million. That figure was $89 million in NTB’s case. eHealth, Inc. (NASDAQ:EHTH) is the most popular stock in this table. On the other hand NANO-X IMAGING LTD (NASDAQ:NNOX) is the least popular one with only 3 bullish hedge fund positions. The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NTB is 60.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately NTB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NTB were disappointed as the stock returned -10.3% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.