The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Investors Bancorp, Inc. (NASDAQ:ISBC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Investors Bancorp, Inc. (NASDAQ:ISBC) a safe stock to buy now? Money managers were turning less bullish. The number of bullish hedge fund bets fell by 1 lately. Investors Bancorp, Inc. (NASDAQ:ISBC) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistics is 33. Our calculations also showed that ISBC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with ISBC holdings at the end of March.
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 56 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 34% through August 17th. 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. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s take a peek at the new hedge fund action regarding Investors Bancorp, Inc. (NASDAQ:ISBC).
How are hedge funds trading Investors Bancorp, Inc. (NASDAQ:ISBC)?
Heading into the third quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ISBC over the last 20 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, Ken Griffin’s Citadel Investment Group has the biggest position in Investors Bancorp, Inc. (NASDAQ:ISBC), worth close to $60.3 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Gillson Capital, managed by Daniel Johnson, which holds a $12.4 million position; 2.2% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions contain Michael Price’s MFP Investors, Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Gillson Capital allocated the biggest weight to Investors Bancorp, Inc. (NASDAQ:ISBC), around 2.22% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, setting aside 2.03 percent of its 13F equity portfolio to ISBC.
Due to the fact that Investors Bancorp, Inc. (NASDAQ:ISBC) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies who were dropping their entire stakes by the end of the second quarter. Intriguingly, Clint Carlson’s Carlson Capital cut the largest investment of all the hedgies monitored by Insider Monkey, comprising an estimated $16.3 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $7.8 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Investors Bancorp, Inc. (NASDAQ:ISBC). We will take a look at AMN Healthcare Services Inc (NYSE:AMN), Triton International Limited (NYSE:TRTN), Assured Guaranty Ltd. (NYSE:AGO), Murphy Oil Corporation (NYSE:MUR), Patterson Companies, Inc. (NASDAQ:PDCO), Associated Banc Corp (NYSE:ASB), and Cronos Group Inc. (NASDAQ:CRON). All of these stocks’ market caps are closest to ISBC’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 19 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $127 million in ISBC’s case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table. On the other hand Triton International Limited (NYSE:TRTN) is the least popular one with only 14 bullish hedge fund positions. Investors Bancorp, Inc. (NASDAQ:ISBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ISBC is 76.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately ISBC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ISBC were disappointed as the stock returned -16.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.