Were Hedge Funds Right About Betting On NBT Bancorp Inc. (NBTB)?

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (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. We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards NBT Bancorp Inc. (NASDAQ:NBTB).

Is NBT Bancorp Inc. (NASDAQ:NBTB) a buy here? Investors who are in the know are getting more optimistic. The number of bullish hedge fund positions went up by 1 in recent months. Our calculations also showed that NBTB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the financial world there are a multitude of tools shareholders employ to assess their holdings. A couple of the most useful tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can beat the S&P 500 by a solid amount (see the details here).


Cliff Asness of AQR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the key hedge fund action regarding NBT Bancorp Inc. (NASDAQ:NBTB).

Hedge fund activity in NBT Bancorp Inc. (NASDAQ:NBTB)

At Q4’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the third quarter of 2019. By comparison, 9 hedge funds held shares or bullish call options in NBTB a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

The largest stake in NBT Bancorp Inc. (NASDAQ:NBTB) was held by Renaissance Technologies, which reported holding $7.4 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $2 million position. Other investors bullish on the company included AQR Capital Management, Millennium Management, and PDT Partners. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to NBT Bancorp Inc. (NASDAQ:NBTB), around 0.03% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to NBTB.

As aggregate interest increased, specific money managers have jumped into NBT Bancorp Inc. (NASDAQ:NBTB) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the largest position in NBT Bancorp Inc. (NASDAQ:NBTB). ExodusPoint Capital had $0.4 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $0.3 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to NBT Bancorp Inc. (NASDAQ:NBTB). These stocks are Northwest Bancshares, Inc. (NASDAQ:NWBI), American Woodmark Corporation (NASDAQ:AMWD), BrightView Holdings, Inc. (NYSE:BV), and Tellurian Inc. (NASDAQ:TELL). This group of stocks’ market values resemble NBTB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NWBI 19 66676 -1
AMWD 17 50799 2
BV 9 273928 -2
TELL 11 37746 -4
Average 14 107287 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $13 million in NBTB’s case. Northwest Bancshares, Inc. (NASDAQ:NWBI) is the most popular stock in this table. On the other hand BrightView Holdings, Inc. (NYSE:BV) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks NBT Bancorp Inc. (NASDAQ:NBTB) is even less popular than BV. Hedge funds dodged a bullet by taking a bearish stance towards NBTB. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately NBTB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NBTB investors were disappointed as the stock returned -19% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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