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Did Hedge Funds Make The Right Call On The Bank of N.T. Butterfield & Son Limited (NTB)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtThe Bank of N.T. Butterfield & Son Limited (NYSE:NTB) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) investors should pay attention to an increase in hedge fund sentiment recently. Our calculations also showed that NTB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a large number of formulas stock traders put to use to value publicly traded companies. Some of the best formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outclass the broader indices by a superb margin (see the details here).

TIGER MANAGEMENT

Julian Robertson of Tiger Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s take a glance at the new hedge fund action surrounding The Bank of N.T. Butterfield & Son Limited (NYSE:NTB).

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

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in NTB a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Southpoint Capital Advisors was the largest shareholder of The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), with a stake worth $18.9 million reported as of the end of September. Trailing Southpoint Capital Advisors was Adage Capital Management, which amassed a stake valued at $17.9 million. Royce & Associates, Two Sigma Advisors, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Southpoint Capital Advisors allocated the biggest weight to The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), around 0.55% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to NTB.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Renaissance Technologies, created the biggest position in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB). Renaissance Technologies had $1.8 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.7 million investment in the stock during the quarter. The only other fund with a new position in the stock is Julian Robertson’s Tiger Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) but similarly valued. We will take a look at Supernus Pharmaceuticals Inc (NASDAQ:SUPN), Canadian Solar Inc. (NASDAQ:CSIQ), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), and Glu Mobile Inc. (NASDAQ:GLUU). This group of stocks’ market values are closest to NTB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SUPN 23 130980 3
CSIQ 11 86580 -3
SBCF 8 11443 0
GLUU 18 113910 -2
Average 15 85728 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $69 million in NTB’s case. Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is the most popular stock in this table. On the other hand Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is the least popular one with only 8 bullish hedge fund positions. The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on NTB as the stock returned 58.5% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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