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Hedge Funds Are Selling Stifel Financial Corp. (SF)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Stifel Financial Corp. (NYSE:SF) in this article.

Stifel Financial Corp. (NYSE:SF) has experienced a decrease in enthusiasm from smart money of late. Our calculations also showed that SF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s check out the new hedge fund action surrounding Stifel Financial Corp. (NYSE:SF).

Hedge fund activity in Stifel Financial Corp. (NYSE:SF)

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the second quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in SF a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Stifel Financial Corp. (NYSE:SF), with a stake worth $102.9 million reported as of the end of September. Trailing Fisher Asset Management was GLG Partners, which amassed a stake valued at $14.3 million. AQR Capital Management, Citadel Investment Group, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fisher Asset Management allocated the biggest weight to Stifel Financial Corp. (NYSE:SF), around 0.11% of its 13F portfolio. GLG Partners is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to SF.

Judging by the fact that Stifel Financial Corp. (NYSE:SF) has experienced falling interest from hedge fund managers, we can see that there was a specific group of fund managers who sold off their positions entirely last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management sold off the largest position of the 750 funds monitored by Insider Monkey, valued at an estimated $7 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Stifel Financial Corp. (NYSE:SF) but similarly valued. These stocks are Nomad Foods Limited (NYSE:NOMD), FTI Consulting, Inc. (NYSE:FCN), IBERIABANK Corporation (NASDAQ:IBKC), and Outfront Media Inc (NYSE:OUT). This group of stocks’ market valuations are closest to SF’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NOMD 37 486749 5
FCN 18 138946 1
IBKC 19 163668 -6
OUT 29 478492 7
Average 25.75 316964 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $317 million. That figure was $155 million in SF’s case. Nomad Foods Limited (NYSE:NOMD) is the most popular stock in this table. On the other hand FTI Consulting, Inc. (NYSE:FCN) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Stifel Financial Corp. (NYSE:SF) is even less popular than FCN. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on SF, though not to the same extent, as the stock returned 9.2% during the fourth quarter (through 11/30) and outperformed the market as well.

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

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