Is STXB A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is STXB a good stock to buy now? Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) investors should be aware of an increase in support from the world’s most elite money managers in recent months. Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that STXB 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.

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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Emanuel J. Friedman

Emanuel Friedman of EJF Capital

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 we’re going to take a glance at the key hedge fund action surrounding Spirit of Texas Bancshares, Inc. (NASDAQ:STXB).

What does smart money think about Spirit of Texas Bancshares, Inc. (NASDAQ:STXB)?

At the end of September, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards STXB over the last 21 quarters. So, let’s examine 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, Anton Schutz’s Mendon Capital Advisors has the biggest position in Spirit of Texas Bancshares, Inc. (NASDAQ:STXB), worth close to $6.9 million, accounting for 4% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $1.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include Emanuel J. Friedman’s EJF Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Spirit of Texas Bancshares, Inc. (NASDAQ:STXB), around 4.04% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to STXB.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. EJF Capital, managed by Emanuel J. Friedman, initiated the biggest position in Spirit of Texas Bancshares, Inc. (NASDAQ:STXB). EJF Capital had $1.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.2 million position during the quarter.

Let’s also examine hedge fund activity in other stocks similar to Spirit of Texas Bancshares, Inc. (NASDAQ:STXB). These stocks are Flotek Industries Inc (NYSE:FTK), Territorial Bancorp Inc (NASDAQ:TBNK), Net 1 UEPS Technologies Inc (NASDAQ:UEPS), Summit Financial Group, Inc. (NASDAQ:SMMF), Evofem Biosciences, Inc. (NASDAQ:EVFM), Callon Petroleum Company (NYSE:CPE), and RGC Resources, Inc. (NASDAQ:RGCO). This group of stocks’ market caps resemble STXB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FTK 13 26942 -1
TBNK 4 17688 -1
UEPS 13 30324 -1
SMMF 3 4503 -1
EVFM 11 4626 -4
CPE 4 9386 -16
RGCO 1 1916 -1
Average 7 13626 -3.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $11 million in STXB’s case. Flotek Industries Inc (NYSE:FTK) is the most popular stock in this table. On the other hand RGC Resources, Inc. (NASDAQ:RGCO) is the least popular one with only 1 bullish hedge fund positions. Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STXB is 66.2. 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. Hedge funds were also right about betting on STXB as the stock returned 45.9% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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