Stock Yards Bancorp, Inc. (SYBT) Fell Out Of Favor With Hedge Funds

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Stock Yards Bancorp, Inc. (NASDAQ:SYBT) in this article.

Stock Yards Bancorp, Inc. (NASDAQ:SYBT) was in 5 hedge funds’ portfolios at the end of March. The all time high for this statistic is 11. SYBT investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 6 hedge funds in our database with SYBT holdings at the end of December. Our calculations also showed that SYBT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 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.

Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 let’s take a look at the latest hedge fund action encompassing Stock Yards Bancorp, Inc. (NASDAQ:SYBT).

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

At first quarter’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SYBT over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the most valuable position in Stock Yards Bancorp, Inc. (NASDAQ:SYBT). Renaissance Technologies has a $4.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish consist of Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Stock Yards Bancorp, Inc. (NASDAQ:SYBT), around 0.01% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, designating 0.0009 percent of its 13F equity portfolio to SYBT.

Seeing as Stock Yards Bancorp, Inc. (NASDAQ:SYBT) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds who were dropping their entire stakes in the first quarter. It’s worth mentioning that David Harding’s Winton Capital Management cut the largest position of all the hedgies followed by Insider Monkey, comprising close to $0.3 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dropped its stock, about $0.2 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Stock Yards Bancorp, Inc. (NASDAQ:SYBT). These stocks are Huron Consulting Group Inc. (NASDAQ:HURN), Linx S.A. (NYSE:LINX), Sturm, Ruger & Company, Inc. (NYSE:RGR), 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT), Vermilion Energy Inc (NYSE:VET), QAD Inc. (NASDAQ:QADA), and The Chefs Warehouse, Inc (NASDAQ:CHEF). This group of stocks’ market values match SYBT’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $6 million in SYBT’s case. Sturm, Ruger & Company, Inc. (NYSE:RGR) is the most popular stock in this table. On the other hand Linx S.A. (NYSE:LINX) is the least popular one with only 3 bullish hedge fund positions. Stock Yards Bancorp, Inc. (NASDAQ:SYBT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SYBT is 23.2. 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 negative signal and 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately SYBT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SYBT investors were disappointed as the stock returned 0.9% since the end of March (through 6/18) 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 most of these stocks already outperformed the market in 2021.

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