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Hedge Funds Have Never Been More Bullish On NBT Bancorp Inc. (NBTB)

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was NBT Bancorp Inc. (NASDAQ:NBTB).

Is NBT Bancorp Inc. (NASDAQ:NBTB) an excellent investment now? Investors who are in the know are getting more optimistic. The number of bullish hedge fund positions inched up by 1 lately. Our calculations also showed that NBTB isn’t among the 30 most popular stocks among hedge funds.

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 market by 32 percentage points since May 2014 through March 12, 2019 (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.

Ken Griffin CITADEL INVESTMENT GROUP

We’re going to check out the fresh hedge fund action surrounding NBT Bancorp Inc. (NASDAQ:NBTB).

What does the smart money think about NBT Bancorp Inc. (NASDAQ:NBTB)?

At the end of the fourth quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in NBTB a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

NBTB_apr2019

The largest stake in NBT Bancorp Inc. (NASDAQ:NBTB) was held by Renaissance Technologies, which reported holding $3.3 million worth of stock at the end of December. It was followed by AQR Capital Management with a $2 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Holocene Advisors.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, created the biggest position in NBT Bancorp Inc. (NASDAQ:NBTB). D E Shaw had $0.2 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a $0 million position during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as NBT Bancorp Inc. (NASDAQ:NBTB) but similarly valued. We will take a look at The Gabelli Dividend & Income Trust (NYSE:GDV), Innospec Inc. (NASDAQ:IOSP), Ameris Bancorp (NASDAQ:ABCB), and Regenxbio Inc (NASDAQ:RGNX). This group of stocks’ market valuations are similar to NBTB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GDV 2 5135 -1
IOSP 14 52822 2
ABCB 18 120240 5
RGNX 17 232321 -7
Average 12.75 102630 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $8 million in NBTB’s case. Ameris Bancorp (NASDAQ:ABCB) is the most popular stock in this table. On the other hand The Gabelli Dividend & Income Trust (NYSE:GDV) is the least popular one with only 2 bullish hedge fund positions. NBT Bancorp Inc. (NASDAQ:NBTB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NBTB wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); NBTB investors were disappointed as the stock returned 6.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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