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Hedge Fund Interest In Atlantic Capital Bancshares, Inc. Keeps Constant (ACBI)

In this article you are going to find out whether hedge funds think Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. 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 Landec Corporation (NASDAQ:LNDC), Gladstone Land Corporation (NASDAQ:LAND), and Personalis, Inc. (NASDAQ:PSNL) to gather more data points. Our calculations also showed that ACBI 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Fred Cummings of Elizabeth Park Capital

Fred Cummings of Elizabeth Park Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the fresh hedge fund action surrounding Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI).

How have hedgies been trading Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in ACBI 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.

Among these funds, MFP Investors held the most valuable stake in Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), which was worth $11.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $6.6 million worth of shares. Elizabeth Park Capital Management, D E Shaw, and AQR Capital Management 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 Elizabeth Park Capital Management allocated the biggest weight to Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), around 4.72% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, setting aside 2.29 percent of its 13F equity portfolio to ACBI.

Because Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers who were dropping their entire stakes by the end of the first quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of the 750 funds watched by Insider Monkey, totaling an estimated $1.3 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI). These stocks are Landec Corporation (NASDAQ:LNDC), Gladstone Land Corporation (NASDAQ:LAND), Personalis, Inc. (NASDAQ:PSNL), and iRadimed Corporation (NASDAQ:IRMD). This group of stocks’ market valuations resemble ACBI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LNDC 15 58125 3
LAND 8 9231 1
PSNL 5 7405 -5
IRMD 14 32146 2
Average 10.5 26727 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $37 million in ACBI’s case. Landec Corporation (NASDAQ:LNDC) is the most popular stock in this table. On the other hand Personalis, Inc. (NASDAQ:PSNL) is the least popular one with only 5 bullish hedge fund positions. Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) 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. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately ACBI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ACBI were disappointed as the stock returned -1.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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