Hedge Funds Are Buying Byline Bancorp, Inc. (BY)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Byline Bancorp, Inc. (NYSE:BY)? The smart money sentiment can provide an answer to this question.

Byline Bancorp, Inc. (NYSE:BY) was in 5 hedge funds’ portfolios at the end of June. BY shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. There were 3 hedge funds in our database with BY positions at the end of the previous quarter. Our calculations also showed that BY isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are dozens of metrics shareholders employ to assess their holdings. A duo of the less utilized metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite fund managers can beat the broader indices by a solid margin (see the details here).

John Overdeck of Two Sigma

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the key hedge fund action surrounding Byline Bancorp, Inc. (NYSE:BY).

How are hedge funds trading Byline Bancorp, Inc. (NYSE:BY)?

At Q2’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BY over the last 16 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

No of Hedge Funds with BY Positions

Among these funds, Mendon Capital Advisors held the most valuable stake in Byline Bancorp, Inc. (NYSE:BY), which was worth $12.2 million at the end of the second quarter. On the second spot was Millennium Management which amassed $3.6 million worth of shares. Moreover, Renaissance Technologies, Citadel Investment Group, and Two Sigma Advisors were also bullish on Byline Bancorp, Inc. (NYSE:BY), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the most valuable position in Byline Bancorp, Inc. (NYSE:BY). Millennium Management had $3.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group 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 John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Byline Bancorp, Inc. (NYSE:BY) but similarly valued. We will take a look at Preferred Bank (NASDAQ:PFBC), Oasis Midstream Partners LP (NYSE:OMP), Gulfport Energy Corporation (NASDAQ:GPOR), and Cerus Corporation (NASDAQ:CERS). This group of stocks’ market caps match BY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PFBC 12 39406 1
OMP 5 15907 2
GPOR 17 105656 -6
CERS 13 98617 -4
Average 11.75 64897 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $20 million in BY’s case. Gulfport Energy Corporation (NASDAQ:GPOR) is the most popular stock in this table. On the other hand Oasis Midstream Partners LP (NYSE:OMP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Byline Bancorp, Inc. (NYSE:BY) is even less popular than OMP. Hedge funds dodged a bullet by taking a bearish stance towards BY. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BY investors were disappointed as the stock returned -6.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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