Is SBSI A Good Stock To Buy Now?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Southside Bancshares, Inc. (NASDAQ:SBSI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is SBSI a good stock to buy now? Southside Bancshares, Inc. (NASDAQ:SBSI) shareholders have witnessed a decrease in hedge fund interest recently. Southside Bancshares, Inc. (NASDAQ:SBSI) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. There were 11 hedge funds in our database with SBSI holdings at the end of June. Our calculations also showed that SBSI isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 21st century investor’s toolkit there are plenty of formulas investors have at their disposal to appraise publicly traded companies. A couple of the most under-the-radar formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can trounce the S&P 500 by a significant margin (see the details here).

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s view the key hedge fund action encompassing Southside Bancshares, Inc. (NASDAQ:SBSI).

What have hedge funds been doing with Southside Bancshares, Inc. (NASDAQ:SBSI)?

At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SBSI over the last 21 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.

The largest stake in Southside Bancshares, Inc. (NASDAQ:SBSI) was held by Renaissance Technologies, which reported holding $25.1 million worth of stock at the end of September. It was followed by Third Avenue Management with a $3.6 million position. Other investors bullish on the company included Citadel Investment Group, Fisher Asset Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Southside Bancshares, Inc. (NASDAQ:SBSI), around 0.51% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to SBSI.

Due to the fact that Southside Bancshares, Inc. (NASDAQ:SBSI) has faced bearish sentiment from the smart money, we can see that there is a sect of money managers that slashed their positions entirely last quarter. At the top of the heap, Michael Gelband’s ExodusPoint Capital cut the largest position of the “upper crust” of funds monitored by Insider Monkey, valued at about $0.8 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $0.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Southside Bancshares, Inc. (NASDAQ:SBSI). These stocks are Provident Financial Services, Inc. (NYSE:PFS), Pliant Therapeutics, Inc. (NASDAQ:PLRX), National Bank Holdings Corp (NYSE:NBHC), Taysha Gene Therapies, Inc. (NASDAQ:TSHA), ATN International, Inc. (NASDAQ:ATNI), Twin River Worldwide Holdings Inc. (NYSE:TRWH), and Huami Corporation (NYSE:HMI). This group of stocks’ market caps match SBSI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PFS 10 18111 0
PLRX 11 157744 -2
NBHC 6 45405 1
TSHA 15 72542 15
ATNI 9 47619 1
TRWH 17 164279 -1
HMI 7 14122 1
Average 10.7 74260 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $32 million in SBSI’s case. Twin River Worldwide Holdings Inc. (NYSE:TRWH) is the most popular stock in this table. On the other hand National Bank Holdings Corp (NYSE:NBHC) is the least popular one with only 6 bullish hedge fund positions. Southside Bancshares, Inc. (NASDAQ:SBSI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SBSI is 29.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on SBSI as the stock returned 25.4% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.

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