Is State Bank Financial Corp (STBZ) A Good Stock To Buy?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards State Bank Financial Corp (NASDAQ:STBZ), and what that likely means for the prospects of the company and its stock.

Is State Bank Financial Corp (NASDAQ:STBZ) going to take off soon? The best stock pickers are selling. The number of bullish hedge fund bets shrunk by 5 lately. The hedge fund sentiment aligns perfectly with the stock market behavior, as the shares of State Bank Financial Corp (NASDAQ:STBZ) were down 4.7% during the quarter. For a better understanding of the hedge fund sentiment, we will discuss hedgies that held stakes in State Bank Financial Corp (NASDAQ:STBZ), at the end of the previous quarter.

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 Navigator Holdings Ltd (NYSE:NVGS), Capital Southwest Corporation (NASDAQ:CSWC), and Capital Product Partners L.P. (NASDAQ:CPLP) to gather more data points.

In today’s marketplace, there are several methods stock market investors put to use to evaluate publicly traded companies. A pair of the most under-the-radar methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outpace the S&P 500 by a healthy margin (see the details here).

Now, we’re going to view the new action regarding State Bank Financial Corp (NASDAQ:STBZ).

What does the smart money think about State Bank Financial Corp (NASDAQ:STBZ)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 31% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Robert Pohly’s Samlyn Capital has the biggest position in State Bank Financial Corp (NASDAQ:STBZ), worth close to $22.7 million, amounting to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Forest Hill Capital, led by Mark Lee, holding a $22.7 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Gregg J. Powers’ Private Capital Management, Chuck Royce’s Royce & Associates, and Anton Schutz’s Mendon Capital Advisors.

Because State Bank Financial Corp (NASDAQ:STBZ) has faced a bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of hedgies that elected to cut their entire stakes last quarter. Intriguingly, William Black’s Consector Capital cut the largest position of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $2 million in stock. Shawn Bergerson and Martin Kalish’s fund, Waterstone Capital Management, also said goodbye to its stock, about $1.9 million worth of shares. These transactions are important to note, as total hedge fund interest dropped by 5 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to State Bank Financial Corp (NASDAQ:STBZ). These stocks are Navigator Holdings Ltd (NYSE:NVGS), Capital Southwest Corporation (NASDAQ:CSWC), Capital Product Partners L.P. (NASDAQ:CPLP), and Sun Hydraulics Corporation (NASDAQ:SNHY). This group of stocks’ market values resemble State Bank Financial Corp (NASDAQ:STBZ)’s market value.

As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $94 million in State Bank Financial Corp (NASDAQ:STBZ)’s case. Navigator Holdings Ltd (NYSE:NVGS) is the most popular stock in this table. On the other hand, Capital Product Partners L.P. (NASDAQ:CPLP) is the least popular one with only 6 bullish hedge fund positions. State Bank Financial Corp (NASDAQ:STBZ) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Navigator Holdings Ltd (NYSE:NVGS) might be a better candidate to consider a long position.