If you’d ask most investors, hedge funds are viewed as slow, old financial tools of the past. While there are more than 8000 funds trading today, we at Insider Monkey hone in on the aristocrats of this group, around 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total capital, and by keeping an eye on their top equity investments, we have unearthed a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as important, positive insider trading sentiment is another way to break down the financial markets. There are a number of motivations for an insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).
Keeping this in mind, we’re going to take a look at the key action surrounding Sterling Bancorp (NYSE:STL).
What have hedge funds been doing with Sterling Bancorp (NYSE:STL)?
At year’s end, a total of 5 of the hedge funds we track were bullish in this stock, a change of -29% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Diamond Hill Capital, managed by Ric Dillon, holds the largest position in Sterling Bancorp (NYSE:STL). Diamond Hill Capital has a $7.5 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is GAMCO Investors, managed by Mario Gabelli, which held a $5.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw.
Seeing as Sterling Bancorp (NYSE:STL) has witnessed falling interest from the smart money, it’s easy to see that there exists a select few hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Matthew Lindenbaum’s Basswood Capital sold off the largest stake of the “upper crust” of funds we track, valued at close to $6.7 million in stock.. Chuck Royce’s fund, Royce & Associates, also dumped its stock, about $0.8 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds last quarter.
How have insiders been trading Sterling Bancorp (NYSE:STL)?
Insider buying is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest half-year time period, Sterling Bancorp (NYSE:STL) has seen 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Sterling Bancorp (NYSE:STL). These stocks are Sun Bancorp, Inc. /NJ (NASDAQ:SNBC), Hudson Valley Holding Corp. (NYSE:HVB), Hometrust Bancshares Inc (NASDAQ:HTBI), Arrow Financial Corporation (NASDAQ:AROW), and Bryn Mawr Bank Corp. (NASDAQ:BMTC). This group of stocks belong to the regional – northeast banks industry and their market caps resemble STL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) | 6 | 1 | 0 |
| Hudson Valley Holding Corp. (NYSE:HVB) | 2 | 0 | 4 |
| Hometrust Bancshares Inc (NASDAQ:HTBI) | 2 | 2 | 0 |
| Arrow Financial Corporation (NASDAQ:AROW) | 1 | 2 | 5 |
| Bryn Mawr Bank Corp. (NASDAQ:BMTC) | 2 | 0 | 5 |
With the returns shown by our research, everyday investors should always pay attention to hedge fund and insider trading activity, and Sterling Bancorp (NYSE:STL) is an important part of this process.
