Is SFNC A Good Stock To Buy Now?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Simmons First National Corporation (NASDAQ:SFNC) based on that data.

Is SFNC a good stock to buy now? Simmons First National Corporation (NASDAQ:SFNC) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that SFNC 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Matson Inc. (NYSE:MATX), Cathay General Bancorp (NASDAQ:CATY), and Independent Bank Corp (NASDAQ:INDB) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are over 8000 funds with their doors open at present, Our researchers choose to focus on the top tier of this club, approximately 850 funds. These hedge fund managers command the majority of all hedge funds’ total asset base, and by watching their highest performing picks, Insider Monkey has spotted numerous investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Minhua Zhang of Weld Capital 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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 take a peek at the recent hedge fund action regarding Simmons First National Corporation (NASDAQ:SFNC).

Do Hedge Funds Think SFNC Is A Good Stock To Buy Now?

At the end of September, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SFNC over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in Simmons First National Corporation (NASDAQ:SFNC), worth close to $12.3 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $3.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that are bullish comprise Ken Fisher’s Fisher Asset Management, Noam Gottesman’s GLG Partners and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Simmons First National Corporation (NASDAQ:SFNC), around 0.08% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to SFNC.

Because Simmons First National Corporation (NASDAQ:SFNC) has witnessed falling interest from the smart money, logic holds that there were a few hedge funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $0.9 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $0.7 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Simmons First National Corporation (NASDAQ:SFNC) but similarly valued. These stocks are Matson Inc. (NYSE:MATX), Cathay General Bancorp (NASDAQ:CATY), Independent Bank Corp (NASDAQ:INDB), Kura Oncology, Inc. (NASDAQ:KURA), AlloVir, Inc. (NASDAQ:ALVR), Six Flags Entertainment Corp (NYSE:SIX), and AMTD International Inc. (NYSE:HKIB). This group of stocks’ market caps are closest to SFNC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MATX 9 12408 0
CATY 17 46672 6
INDB 12 13494 5
KURA 34 566918 3
ALVR 11 153698 11
SIX 37 528050 4
HKIB 1 10 0
Average 17.3 188750 4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $24 million in SFNC’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. Simmons First National Corporation (NASDAQ:SFNC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SFNC is 51.7. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on SFNC as the stock returned 34.4% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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