Hedge Funds Are Buying First Busey Corporation (BUSE)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like First Busey Corporation (NASDAQ:BUSE) .

Is First Busey Corporation (NASDAQ:BUSE) undervalued? The smart money is surely becoming more confident. The number of bullish hedge fund investments increased by 2 recently. There were 11 hedge funds in our database with BUSE positions at the end of the 2016 third quarter. 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 Liberty Braves Group (NASDAQ:BATRK), Global Blood Therapeutics Inc (NASDAQ:GBT), and Liberty Braves Group (NASDAQ:BATRA) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

With all of this in mind, we’re going to check out the latest action regarding First Busey Corporation (NASDAQ:BUSE).

What have hedge funds been doing with First Busey Corporation (NASDAQ:BUSE)?

Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, up 22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BUSE over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in First Busey Corporation (NASDAQ:BUSE). According to regulatory filings, the fund has a $7.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Israel Englander’s Millennium Management, holding a $3.7 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Matthew Lindenbaum’s Basswood Capital and Cliff Asness’ AQR Capital Management. 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.

As one would reasonably expect, some big names have been driving this bullishness. Stevens Capital Management, led by Matthew Tewksbury, initiated the largest position in First Busey Corporation (NASDAQ:BUSE). According to its latest 13F filing, the fund had $0.2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.2 million position during the quarter. The only other fund with a brand new BUSE position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as First Busey Corporation (NASDAQ:BUSE) but similarly valued. These stocks are Liberty Braves Group (NASDAQ:BATRK), Global Blood Therapeutics Inc (NASDAQ:GBT), Liberty Braves Group (NASDAQ:BATRA), and BJ’s Restaurants, Inc. (NASDAQ:BJRI). This group of stocks’ market values resemble BUSE’s market value.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $22 million in BUSE’s case. Liberty Braves Group (NASDAQ:BATRK) is the most popular stock in this table. On the other hand Liberty Braves Group (NASDAQ:BATRA) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks First Busey Corporation (NASDAQ:BUSE) is even less popular than BATRA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.