The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. 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 we look at how hedge funds traded ServisFirst Bancshares, Inc. (NASDAQ:SFBS) and determine whether the smart money was really smart about this stock.
Is ServisFirst Bancshares, Inc. (NASDAQ:SFBS) a buy here? Money managers were taking an optimistic view. The number of bullish hedge fund bets went up by 1 recently. Our calculations also showed that SFBS 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). SFBS was in 10 hedge funds’ portfolios at the end of March. There were 9 hedge funds in our database with SFBS positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. Now we’re going to analyze the new hedge fund action encompassing ServisFirst Bancshares, Inc. (NASDAQ:SFBS).
What have hedge funds been doing with ServisFirst Bancshares, Inc. (NASDAQ:SFBS)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the fourth quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in SFBS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fred Cummings’s Elizabeth Park Capital Management has the largest position in ServisFirst Bancshares, Inc. (NASDAQ:SFBS), worth close to $2.6 million, comprising 2% of its total 13F portfolio. On Elizabeth Park Capital Management’s heels is Ken Fisher of Fisher Asset Management, with a $2.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Ken Griffin’s Citadel Investment Group, Gregg Moskowitz’s Interval Partners and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to ServisFirst Bancshares, Inc. (NASDAQ:SFBS), around 1.96% of its 13F portfolio. Interval Partners is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to SFBS.
As one would reasonably expect, key hedge funds were breaking ground themselves. Elizabeth Park Capital Management, managed by Fred Cummings, assembled the most valuable position in ServisFirst Bancshares, Inc. (NASDAQ:SFBS). Elizabeth Park Capital Management had $2.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.8 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 now review hedge fund activity in other stocks similar to ServisFirst Bancshares, Inc. (NASDAQ:SFBS). These stocks are Phoenix Tree Holdings Limited (NYSE:DNK), National Vision Holdings, Inc. (NASDAQ:EYE), LexinFintech Holdings Ltd. (NASDAQ:LX), and Pluralsight, Inc. (NASDAQ:PS). This group of stocks’ market caps resemble SFBS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $10 million in SFBS’s case. Pluralsight, Inc. (NASDAQ:PS) is the most popular stock in this table. On the other hand Phoenix Tree Holdings Limited (NYSE:DNK) is the least popular one with only 3 bullish hedge fund positions. ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is not the least popular stock in this group but hedge fund interest is still below 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on SFBS, though not to the same extent, as the stock returned 22.6% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.