Was The Smart Money Right About SVB Financial Group (SIVB)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought SVB Financial Group (NASDAQ:SIVB) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Is SVB Financial Group (NASDAQ:SIVB) an excellent investment now? The smart money was selling. The number of long hedge fund bets were cut by 4 recently. SVB Financial Group (NASDAQ:SIVB) was in 45 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 49. Our calculations also showed that SIVB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 49 hedge funds in our database with SIVB holdings at the end of June.

Robert Pohly of Samlyn Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to take a peek at the latest hedge fund action regarding SVB Financial Group (NASDAQ:SIVB).

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

Heading into the fourth quarter of 2021, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in SIVB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in SVB Financial Group (NASDAQ:SIVB) was held by Fisher Asset Management, which reported holding $415 million worth of stock at the end of September. It was followed by AQR Capital Management with a $125.9 million position. Other investors bullish on the company included Citadel Investment Group, PEAK6 Capital Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to SVB Financial Group (NASDAQ:SIVB), around 4.01% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, setting aside 2.81 percent of its 13F equity portfolio to SIVB.

Because SVB Financial Group (NASDAQ:SIVB) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few fund managers that elected to cut their positions entirely in the third quarter. Intriguingly, Matthew Stadelman’s Diamond Hill Capital said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, comprising an estimated $120.7 million in stock. James Parsons’s fund, Junto Capital Management, also said goodbye to its stock, about $34.6 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SVB Financial Group (NASDAQ:SIVB) but similarly valued. These stocks are Travelers Companies Inc (NYSE:TRV), Kinder Morgan Inc (NYSE:KMI), The Allstate Corporation (NYSE:ALL), DiDi Global Inc. (NYSE:DIDI), Manulife Financial Corporation (NYSE:MFC), Xilinx, Inc. (NASDAQ:XLNX), and Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). This group of stocks’ market caps are closest to SIVB’s market cap.

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As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1155 million. That figure was $1207 million in SIVB’s case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand DiDi Global Inc. (NYSE:DIDI) is the least popular one with only 15 bullish hedge fund positions. SVB Financial Group (NASDAQ:SIVB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIVB is 60.5. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, SIVB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SIVB were disappointed as the stock returned -9.7% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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

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