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Hedge Funds Keep Selling SVB Financial Group (SIVB)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SVB Financial Group (NASDAQ:SIVB).

SVB Financial Group (NASDAQ:SIVB) investors should be aware of a decrease in hedge fund sentiment of late. Our calculations also showed that SIVB 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.

In the eyes of most shareholders, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open today, We look at the bigwigs of this club, about 850 funds. These investment experts command most of all hedge funds’ total capital, and by keeping track of their first-class equity investments, Insider Monkey has found several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually 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 .

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this oneWe interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the fresh hedge fund action surrounding SVB Financial Group (NASDAQ:SIVB).

Hedge fund activity in SVB Financial Group (NASDAQ:SIVB)

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in SIVB a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in SVB Financial Group (NASDAQ:SIVB). Fisher Asset Management has a $118 million position in the stock, comprising 0.1% of its 13F portfolio. On Fisher Asset Management’s heels is Diamond Hill Capital, led by Ric Dillon, holding a $67.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other peers that are bullish include Cliff Asness’s AQR Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Principal Global Investors’s Columbus Circle Investors. In terms of the portfolio weights assigned to each position Spindletop Capital allocated the biggest weight to SVB Financial Group (NASDAQ:SIVB), around 14.46% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, earmarking 3.28 percent of its 13F equity portfolio to SIVB.

Because SVB Financial Group (NASDAQ:SIVB) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few fund managers that decided to sell off their full holdings in the first quarter. It’s worth mentioning that Ravi Chopra’s Azora Capital said goodbye to the largest stake of all the hedgies watched by Insider Monkey, worth close to $41.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $30.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SVB Financial Group (NASDAQ:SIVB) but similarly valued. We will take a look at Vistra Energy Corp. (NYSE:VST), CenterPoint Energy, Inc. (NYSE:CNP), Nordson Corporation (NASDAQ:NDSN), and Erie Indemnity Company (NASDAQ:ERIE). All of these stocks’ market caps are similar to SIVB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VST 39 1440172 -10
CNP 32 560894 2
NDSN 22 98925 -7
ERIE 17 63002 -3
Average 27.5 540748 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $541 million. That figure was $384 million in SIVB’s case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 17 bullish hedge fund positions. SVB Financial Group (NASDAQ:SIVB) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on SIVB as the stock returned 42.1% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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