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Hedge Funds Cautiously Watching First Internet Bancorp (INBK)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about First Internet Bancorp (NASDAQ:INBK)?

Hedge fund interest in First Internet Bancorp (NASDAQ:INBK) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare INBK to other stocks including FS Bancorp, Inc. (NASDAQ:FSBW), Profound Medical Corp. (NASDAQ:PROF), and Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most market participants, hedge funds are seen as unimportant, outdated financial tools of the past. While there are more than 8000 funds with their doors open at present, Our researchers look at the bigwigs of this club, about 850 funds. Most estimates calculate that this group of people have their hands on the majority of the hedge fund industry’s total capital, and by shadowing their first-class stock picks, Insider Monkey has brought to light several investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s take a peek at the new hedge fund action regarding First Internet Bancorp (NASDAQ:INBK).

Hedge fund activity in First Internet Bancorp (NASDAQ:INBK)

Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in INBK over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in First Internet Bancorp (NASDAQ:INBK) was held by Renaissance Technologies, which reported holding $1.3 million worth of stock at the end of September. It was followed by Ancora Advisors with a $0.8 million position. Other investors bullish on the company included Winton Capital Management, Voss Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Voss Capital allocated the biggest weight to First Internet Bancorp (NASDAQ:INBK), around 0.94% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to INBK.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Arrowstreet Capital).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as First Internet Bancorp (NASDAQ:INBK) but similarly valued. These stocks are FS Bancorp, Inc. (NASDAQ:FSBW), Profound Medical Corp. (NASDAQ:PROF), Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), and CONSOL Coal Resources LP (NYSE:CCR). This group of stocks’ market caps match INBK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FSBW 5 11452 -3
PROF 8 16670 5
AOSL 11 19992 2
CCR 2 31398 0
Average 6.5 19878 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $5 million in INBK’s case. Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL) is the most popular stock in this table. On the other hand CONSOL Coal Resources LP (NYSE:CCR) is the least popular one with only 2 bullish hedge fund positions. First Internet Bancorp (NASDAQ:INBK) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately INBK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on INBK were disappointed as the stock returned 2.3% 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.