Hedge Funds Are Piling Into Stifel Financial Corp. (SF)

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Stifel Financial Corp. (NYSE:SF) makes for a good investment right now.

Stifel Financial Corp. (NYSE:SF) has experienced an increase in hedge fund sentiment recently. Stifel Financial Corp. (NYSE:SF) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 15 hedge funds in our database with SF positions at the end of the first quarter. Our calculations also showed that SF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s review the key hedge fund action regarding Stifel Financial Corp. (NYSE:SF).

Do Hedge Funds Think SF Is A Good Stock To Buy Now?

At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in SF over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

The largest stake in Stifel Financial Corp. (NYSE:SF) was held by Fisher Asset Management, which reported holding $120.2 million worth of stock at the end of June. It was followed by Millennium Management with a $117.7 million position. Other investors bullish on the company included Citadel Investment Group, Balyasny Asset Management, and D E Shaw. In terms of the portfolio weights assigned to each position Gillson Capital allocated the biggest weight to Stifel Financial Corp. (NYSE:SF), around 0.85% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.66 percent of its 13F equity portfolio to SF.

As aggregate interest increased, key hedge funds have jumped into Stifel Financial Corp. (NYSE:SF) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Stifel Financial Corp. (NYSE:SF). Balyasny Asset Management had $30.9 million invested in the company at the end of the quarter. Renaissance Technologies also made a $21.3 million investment in the stock during the quarter. The following funds were also among the new SF investors: Daniel Johnson’s Gillson Capital, Michael Gelband’s ExodusPoint Capital, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Stifel Financial Corp. (NYSE:SF). These stocks are Marriott Vacations Worldwide Corporation (NYSE:VAC), Brixmor Property Group Inc (NYSE:BRX), Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), Wyndham Hotels & Resorts, Inc. (NYSE:WH), First Industrial Realty Trust, Inc. (NYSE:FR), InVitae Corporation (NYSE:NVTA), and OGE Energy Corp. (NYSE:OGE). This group of stocks’ market valuations are closest to SF’s market valuation.

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As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $680 million. That figure was $417 million in SF’s case. Marriott Vacations Worldwide Corporation (NYSE:VAC) is the most popular stock in this table. On the other hand OGE Energy Corp. (NYSE:OGE) is the least popular one with only 17 bullish hedge fund positions. Stifel Financial Corp. (NYSE:SF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SF is 59.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on SF as the stock returned 19.4% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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