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Hedge Funds Have Never Been More Bullish On Signature Bank (SBNY)

We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Signature Bank (NASDAQ:SBNY).

Signature Bank (NASDAQ:SBNY) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 36 hedge funds’ portfolios at the end of March. At the end of this article we will also compare SBNY to other stocks including Medical Properties Trust, Inc. (NYSE:MPW), Tallgrass Energy, LP (NYSE:TGE), and Jones Lang LaSalle Inc (NYSE:JLL) to get a better sense of its popularity.

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’ 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

We’re going to view the new hedge fund action regarding Signature Bank (NASDAQ:SBNY).

How have hedgies been trading Signature Bank (NASDAQ:SBNY)?

Heading into the second quarter of 2019, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in SBNY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with SBNY Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in Signature Bank (NASDAQ:SBNY). Citadel Investment Group has a $117.5 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is First Pacific Advisors LLC, led by Robert Rodriguez and Steven Romick, holding a $103.8 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Israel Englander’s Millennium Management, Ravi Chopra’s Azora Capital and Dmitry Balyasny’s Balyasny Asset Management.

Since Signature Bank (NASDAQ:SBNY) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that decided to sell off their full holdings by the end of the third quarter. Intriguingly, Joshua Nash’s Ulysses Management dumped the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $3.6 million in stock, and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund cut about $2.6 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Signature Bank (NASDAQ:SBNY). We will take a look at Medical Properties Trust, Inc. (NYSE:MPW), Tallgrass Energy, LP (NYSE:TGE), Jones Lang LaSalle Inc (NYSE:JLL), and Berry Global Group Inc (NYSE:BERY). This group of stocks’ market values are similar to SBNY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MPW 13 220718 -3
TGE 11 36489 3
JLL 23 940107 4
BERY 40 2602301 -3
Average 21.75 949904 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $950 million. That figure was $649 million in SBNY’s case. Berry Global Group Inc (NYSE:BERY) is the most popular stock in this table. On the other hand Tallgrass Energy, LP (NYSE:TGE) is the least popular one with only 11 bullish hedge fund positions. Signature Bank (NASDAQ:SBNY) 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SBNY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SBNY were disappointed as the stock returned -9.3% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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