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Stifel Financial Corp. (SF): Hedge Funds Are Snapping Up

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Stifel Financial Corp. (NYSE:SF) based on that data.

Stifel Financial Corp. (NYSE:SF) has experienced an increase in hedge fund sentiment recently. SF was in 17 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with SF holdings at the end of the previous quarter. Our calculations also showed that SF 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.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the key hedge fund action regarding Stifel Financial Corp. (NYSE:SF).

What does smart money think about Stifel Financial Corp. (NYSE:SF)?

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in SF a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Is SF A Good Stock To Buy?

Among these funds, Fisher Asset Management held the most valuable stake in Stifel Financial Corp. (NYSE:SF), which was worth $49.6 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $24.5 million worth of shares. Arrowstreet Capital, Billings Capital Management, and GLG Partners 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 Billings Capital Management allocated the biggest weight to Stifel Financial Corp. (NYSE:SF), around 14.1% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, setting aside 0.13 percent of its 13F equity portfolio to SF.

As one would reasonably expect, some big names have jumped into Stifel Financial Corp. (NYSE:SF) headfirst. Billings Capital Management, managed by Eric F. Billings, created the largest position in Stifel Financial Corp. (NYSE:SF). Billings Capital Management had $5.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $1.6 million position during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Dmitry Balyasny’s Balyasny Asset Management, and Peter Muller’s PDT Partners.

Let’s now review hedge fund activity in other stocks similar to Stifel Financial Corp. (NYSE:SF). These stocks are Texas Roadhouse Inc (NASDAQ:TXRH), Verint Systems Inc. (NASDAQ:VRNT), Janus Henderson Group plc (NYSE:JHG), and nVent Electric plc (NYSE:NVT). All of these stocks’ market caps resemble SF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TXRH 27 146523 4
VRNT 17 205592 2
JHG 23 124117 5
NVT 29 453695 1
Average 24 232482 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $106 million in SF’s case. nVent Electric plc (NYSE:NVT) is the most popular stock in this table. On the other hand Verint Systems Inc. (NASDAQ:VRNT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Stifel Financial Corp. (NYSE:SF) is even less popular than VRNT. Hedge funds dodged a bullet by taking a bearish stance towards SF. 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 SF wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SF investors were disappointed as the stock returned 14.9% 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.

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