Were Hedge Funds Right About Souring On Banner Corporation (BANR)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Banner Corporation (NASDAQ:BANR) based on those filings.

Is Banner Corporation (NASDAQ:BANR) a marvelous investment now? Prominent investors are in a pessimistic mood. The number of long hedge fund bets went down by 3 lately. Our calculations also showed that BANR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BANR was in 13 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with BANR positions at the end of the previous quarter.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the key hedge fund action encompassing Banner Corporation (NASDAQ:BANR).

Hedge fund activity in Banner Corporation (NASDAQ:BANR)

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the second quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in BANR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of Banner Corporation (NASDAQ:BANR), with a stake worth $32.2 million reported as of the end of September. Trailing Citadel Investment Group was Forest Hill Capital, which amassed a stake valued at $13 million. Elizabeth Park Capital Management, Millennium 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 Forest Hill Capital allocated the biggest weight to Banner Corporation (NASDAQ:BANR), around 4.57% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, dishing out 3.95 percent of its 13F equity portfolio to BANR.

Due to the fact that Banner Corporation (NASDAQ:BANR) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that slashed their positions entirely last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $2.6 million in stock, and Paul Hondros’s AlphaOne Capital Partners was right behind this move, as the fund dumped about $0.9 million worth. These transactions are important to note, as total hedge fund interest dropped by 3 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Banner Corporation (NASDAQ:BANR) but similarly valued. These stocks are JELD-WEN Holding, Inc. (NYSE:JELD), SJW Group (NYSE:SJW), Hillenbrand, Inc. (NYSE:HI), and Stitch Fix, Inc. (NASDAQ:SFIX). All of these stocks’ market caps match BANR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JELD 14 284352 -2
SJW 19 175295 4
HI 22 122793 4
SFIX 23 124598 -5
Average 19.5 176760 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $79 million in BANR’s case. Stitch Fix, Inc. (NASDAQ:SFIX) is the most popular stock in this table. On the other hand JELD-WEN Holding, Inc. (NYSE:JELD) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Banner Corporation (NASDAQ:BANR) is even less popular than JELD. Hedge funds dodged a bullet by taking a bearish stance towards BANR. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BANR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BANR investors were disappointed as the stock returned -2% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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