Were Hedge Funds Right About Snapping Up SunTrust Banks, Inc. (STI)?

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 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider SunTrust Banks, Inc. (NYSE:STI) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

SunTrust Banks, Inc. (NYSE:STI) investors should pay attention to an increase in hedge fund interest lately. Our calculations also showed that STI isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the fresh hedge fund action surrounding SunTrust Banks, Inc. (NYSE:STI).

What have hedge funds been doing with SunTrust Banks, Inc. (NYSE:STI)?

Heading into the third quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 41% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in STI a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

David Harding

More specifically, Arrowstreet Capital was the largest shareholder of SunTrust Banks, Inc. (NYSE:STI), with a stake worth $208 million reported as of the end of March. Trailing Arrowstreet Capital was Alpine Associates, which amassed a stake valued at $114.2 million. Two Sigma Advisors, Sirios Capital Management, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in SunTrust Banks, Inc. (NYSE:STI). Balyasny Asset Management had $67 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $37.2 million investment in the stock during the quarter. The following funds were also among the new STI investors: David Harding’s Winton Capital Management, David MacKnight’s One Fin Capital Management, and Matthew Tewksbury’s Stevens Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SunTrust Banks, Inc. (NYSE:STI) but similarly valued. We will take a look at Motorola Solutions Inc (NYSE:MSI), TD Ameritrade Holding Corp. (NASDAQ:AMTD), Fiat Chrysler Automobiles NV (NYSE:FCAU), and Fortive Corporation (NYSE:FTV). This group of stocks’ market valuations are similar to STI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSI 25 867800 -4
AMTD 22 485654 -8
FCAU 28 1924226 1
FTV 28 362155 2
Average 25.75 909959 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $910 million. That figure was $912 million in STI’s case. Fiat Chrysler Automobiles NV (NYSE:FCAU) is the most popular stock in this table. On the other hand TD Ameritrade Holding Corp. (NASDAQ:AMTD) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks SunTrust Banks, Inc. (NYSE:STI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on STI as the stock returned 10.5% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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