Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Valley National Bancorp (NYSE:VLY).
Valley National Bancorp (NYSE:VLY) was in 24 hedge funds’ portfolios at the end of December. VLY has experienced an increase in hedge fund sentiment in recent months. There were 16 hedge funds in our database with VLY positions at the end of the previous quarter. Our calculations also showed that VLY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Today there are several metrics stock traders put to use to evaluate publicly traded companies. A pair of the most under-the-radar metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a very impressive margin (see the details here).
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the fresh hedge fund action regarding Valley National Bancorp (NYSE:VLY).
What does smart money think about Valley National Bancorp (NASDAQ:VLY)?
Heading into the first quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in VLY a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, founded by Jim Simons, holds the biggest position in Valley National Bancorp (NASDAQ:VLY). Renaissance Technologies has a $33 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Kenneth A. Moffet’s Hourglass Capital and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Hourglass Capital allocated the biggest weight to Valley National Bancorp (NASDAQ:VLY), around 1.19% of its 13F portfolio. Signition LP is also relatively very bullish on the stock, setting aside 0.59 percent of its 13F equity portfolio to VLY.
Now, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Valley National Bancorp (NASDAQ:VLY). Arrowstreet Capital had $5.3 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Ray Dalio’s Bridgewater Associates, D. E. Shaw’s D E Shaw, and Qing Li’s Sciencast Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Valley National Bancorp (NASDAQ:VLY) but similarly valued. These stocks are Ardagh Group S.A. (NYSE:ARD), Grand Canyon Education Inc (NASDAQ:LOPE), Solaredge Technologies Inc (NASDAQ:SEDG), and Ashland Global Holdings Inc.. (NYSE:ASH). This group of stocks’ market valuations are closest to VLY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARD | 9 | 81330 | -3 |
| LOPE | 20 | 115370 | -7 |
| SEDG | 28 | 370387 | 7 |
| ASH | 30 | 1068070 | -3 |
| Average | 21.75 | 408789 | -1.5 |
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 $409 million. That figure was $61 million in VLY’s case. Ashland Global Holdings Inc.. (NYSE:ASH) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 9 bullish hedge fund positions. Valley National Bancorp (NASDAQ:VLY) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately VLY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VLY were disappointed as the stock returned -38.7% 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
