At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (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. In this article, we will take a closer look at hedge fund sentiment towards First Busey Corporation (NASDAQ:BUSE) at the end of the first quarter and determine whether the smart money was really smart about this stock.
First Busey Corporation (NASDAQ:BUSE) was in 11 hedge funds’ portfolios at the end of March. BUSE investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 12 hedge funds in our database with BUSE holdings at the end of the previous quarter. Our calculations also showed that BUSE 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.
Today there are a large number of signals shareholders use to grade publicly traded companies. A couple of the most under-the-radar signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat the S&P 500 by a superb amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. With all of this in mind we’re going to view the fresh hedge fund action surrounding First Busey Corporation (NASDAQ:BUSE).
Hedge fund activity in First Busey Corporation (NASDAQ:BUSE)
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BUSE over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of First Busey Corporation (NASDAQ:BUSE), with a stake worth $18 million reported as of the end of September. Trailing Renaissance Technologies was Basswood Capital, which amassed a stake valued at $2 million. Citadel Investment Group, Millennium Management, and D E Shaw 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 Basswood Capital allocated the biggest weight to First Busey Corporation (NASDAQ:BUSE), around 0.23% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to BUSE.
Judging by the fact that First Busey Corporation (NASDAQ:BUSE) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings by the end of the first quarter. Interestingly, Thomas Bailard’s Bailard Inc sold off the biggest stake of the 750 funds tracked by Insider Monkey, totaling about $0.3 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also said goodbye to its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as First Busey Corporation (NASDAQ:BUSE) but similarly valued. We will take a look at Sonos, Inc. (NASDAQ:SONO), Carpenter Technology Corporation (NYSE:CRS), Sixth Street Specialty Lending Inc (NYSE:TSLX), and Methanex Corporation (NASDAQ:MEOH). This group of stocks’ market values match BUSE’s market value.
|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 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $28 million in BUSE’s case. Sonos, Inc. (NASDAQ:SONO) is the most popular stock in this table. On the other hand Methanex Corporation (NASDAQ:MEOH) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks First Busey Corporation (NASDAQ:BUSE) is even less popular than MEOH. Hedge funds dodged a bullet by taking a bearish stance towards BUSE. 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 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately BUSE wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BUSE investors were disappointed as the stock returned 10.5% 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.