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 Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT).
Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT) has experienced a decrease in hedge fund interest in recent months. SBT was in 9 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with SBT holdings at the end of the previous quarter. Our calculations also showed that SBT 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Now let’s go over the recent hedge fund action surrounding Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT).
What does smart money think about Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT)?
At Q1’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2019. By comparison, 7 hedge funds held shares or bullish call options in SBT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT), which was worth $1.3 million at the end of the third quarter. On the second spot was EJF Capital which amassed $0.6 million worth of shares. Arrowstreet Capital, Winton Capital Management, and Zebra Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Almitas Capital allocated the biggest weight to Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT), around 0.31% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.27 percent of its 13F equity portfolio to SBT.
Because Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings in the first quarter. Interestingly, D. E. Shaw’s D E Shaw dumped the largest position of the “upper crust” of funds watched by Insider Monkey, worth an estimated $0.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT) but similarly valued. We will take a look at Franklin Covey Co. (NYSE:FC), Tuscan Holdings Corp. II (NASDAQ:THCA), Garrett Motion Inc. (NYSE:GTX), and Unifi, Inc. (NYSE:UFI). This group of stocks’ market valuations resemble SBT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $3 million in SBT’s case. Garrett Motion Inc. (NYSE:GTX) is the most popular stock in this table. On the other hand Tuscan Holdings Corp. II (NASDAQ:THCA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT) is even less popular than THCA. Hedge funds dodged a bullet by taking a bearish stance towards SBT. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately SBT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SBT investors were disappointed as the stock returned -25.1% during the second quarter (through June 22nd) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.