Is it smart to be bullish on National Penn Bancshares (NASDAQ:NPBC)?
To many investors, hedge funds are assumed to be overrated, old investment tools of a period lost to current times. Although there are over 8,000 hedge funds with their doors open today, Insider Monkey looks at the aristocrats of this group, about 525 funds. It is assumed that this group controls most of the smart money’s total assets, and by monitoring their highest quality equity investments, we’ve identified a few investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as crucial, positive insider trading activity is another way to look at the world of equities. As the old adage goes: there are plenty of reasons for an executive to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).
Now that that’s out of the way, we’re going to examine the latest info surrounding National Penn Bancshares (NASDAQ:NPBC).
Hedge fund activity in National Penn Bancshares (NASDAQ:NPBC)
Heading into Q3, a total of 8 of the hedge funds we track held long positions in this stock, a change of -27% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, Richard S. Pzena’s Pzena Investment Management had the biggest position in National Penn Bancshares (NASDAQ:NPBC), worth close to $27.5 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Diamond Hill Capital, managed by Ric Dillon, which held a $12.4 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Jim Simons’s Renaissance Technologies.
As National Penn Bancshares (NASDAQ:NPBC) has faced dropping sentiment from upper-tier hedge fund managers, it’s safe to say that there exists a select few hedge funds who sold off their full holdings last quarter. Interestingly, Charles Davidson’s Wexford Capital said goodbye to the biggest investment of all the hedgies we monitor, comprising an estimated $0.6 million in stock, and Mike Vranos of Ellington was right behind this move, as the fund sold off about $0.3 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds last quarter.
Insider trading activity in National Penn Bancshares (NASDAQ:NPBC)
Insider buying is best served when the company in question has seen transactions within the past half-year. Over the latest half-year time frame, National Penn Bancshares (NASDAQ:NPBC) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to National Penn Bancshares (NASDAQ:NPBC). These stocks are Fulton Financial Corp (NASDAQ:FULT), Susquehanna Bancshares Inc (NASDAQ:SUSQ), Webster Financial Corporation (NYSE:WBS), Community Bank System, Inc. (NYSE:CBU), and Valley National Bancorp (NYSE:VLY). All of these stocks are in the regional – northeast banks industry and their market caps are closest to NPBC’s market cap.