Hedge Funds Are Nibbling On The Bank of N.T. Butterfield & Son Limited (NTB)

In this article we will take a look at whether hedge funds think The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) undervalued? The smart money is taking a bullish view. The number of bullish hedge fund positions increased by 1 lately. 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Julian Robertson of Tiger Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the fresh hedge fund action encompassing The Bank of N.T. Butterfield & Son Limited (NYSE:NTB).

What have hedge funds been doing with The Bank of N.T. Butterfield & Son Limited (NYSE:NTB)?

Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in NTB a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, John Smith Clark’s Southpoint Capital Advisors has the biggest position in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), worth close to $18.9 million, accounting for 0.6% of its total 13F portfolio. On Southpoint Capital Advisors’s heels is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $17.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism include Chuck Royce’s Royce & Associates, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw. 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, setting aside 0.21 percent of its 13F equity portfolio to NTB.

As one would reasonably expect, specific money managers have been driving this bullishness. Renaissance Technologies, initiated the most outsized 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 initiated a $0.7 million position during the quarter. The only other fund with a brand new NTB position is Julian Robertson’s Tiger Management.

Let’s now take a look at hedge fund activity in other stocks similar to The Bank of N.T. Butterfield & Son Limited (NYSE:NTB). 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). All of these stocks’ market caps match NTB’s market cap.

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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on NTB as the stock returned 46.6% in Q2 (through June 22nd) 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.