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Bank of N.T. Butterfield & Son Ltd (NTB): How Smart Money Traded the Stock Following Its IPO

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

One company that went public last quarter and managed to capture the attention of smart money investors is Bank of N.T. Butterfield & Son Ltd (NYSE:NTB). The stock started trading on September 16, and at the end of the month 16 funds tracked by Insider Monkey amassed shares of the company. At the end of this article we will also compare NTB to other stocks including American Axle & Manufact. Holdings, Inc. (NYSE:AXL), American Woodmark Corporation (NASDAQ:AMWD), and Community Health Systems (NYSE:CYH) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to view the new action regarding Bank of N.T. Butterfield & Son Ltd (NYSE:NTB).

What does the smart money think about Bank of N.T. Butterfield & Son Ltd (NYSE:NTB)?

As stated earlier, following its IPO, 16 funds from our database reported long positions in NTB as of September 30.  So, let’s check out which hedge funds were among the top holders of the stock.

When looking at the institutional investors followed by Insider Monkey, Alyeska Investment Group, led by Anand Parekh, holds the largest position in Bank of N.T. Butterfield & Son Ltd (NYSE:NTB). Alyeska Investment Group has a $39.6 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is John Smith Clark of Southpoint Capital Advisors, with a $16.3 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Steve Pei’s Gratia Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

On the next page, we’ll see how the hedge fund sentiment towards NTB compares to other companies with similar market caps.

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