Hedge Funds Have Never Been This Bullish On BancorpSouth Bank (BXS)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of BancorpSouth Bank (NYSE:BXS) based on that data.

BancorpSouth Bank (NYSE:BXS) was in 15 hedge funds’ portfolios at the end of March. BXS shareholders have witnessed an increase in hedge fund sentiment recently. There were 14 hedge funds in our database with BXS holdings at the end of the previous quarter. Our calculations also showed that BXS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. 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. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding BancorpSouth Bank (NYSE:BXS).

How have hedgies been trading BancorpSouth Bank (NYSE:BXS)?

Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BXS over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in BancorpSouth Bank (NYSE:BXS) was held by Fisher Asset Management, which reported holding $16.8 million worth of stock at the end of September. It was followed by D E Shaw with a $3.8 million position. Other investors bullish on the company included Interval Partners, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Interval Partners allocated the biggest weight to BancorpSouth Bank (NYSE:BXS), around 0.29% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, designating 0.14 percent of its 13F equity portfolio to BXS.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the most outsized position in BancorpSouth Bank (NYSE:BXS). Millennium Management had $3.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $2.3 million position during the quarter. The other funds with brand new BXS positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BancorpSouth Bank (NYSE:BXS) but similarly valued. These stocks are Investors Bancorp, Inc. (NASDAQ:ISBC), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), Cronos Group Inc. (NASDAQ:CRON), and Ryman Hospitality Properties, Inc. (NYSE:RHP). This group of stocks’ market caps resemble BXS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ISBC 26 136450 -4
BHVN 29 390989 -6
CRON 10 73477 0
RHP 26 266783 -4
Average 22.75 216925 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $37 million in BXS’s case. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is the most popular stock in this table. On the other hand Cronos Group Inc. (NASDAQ:CRON) is the least popular one with only 10 bullish hedge fund positions. BancorpSouth Bank (NYSE:BXS) 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 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately BXS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BXS investors were disappointed as the stock returned 18.7% during the second quarter 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 most of these stocks already outperformed the market in 2020.

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