We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (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. Keeping this in mind, let’s take a look at whether Southside Bancshares, Inc. (NASDAQ:SBSI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Southside Bancshares, Inc. (NASDAQ:SBSI) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. SBSI was in 8 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 7 hedge funds in our database with SBSI positions at the end of the previous quarter. Our calculations also showed that SBSI 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).
Martin Whitman of Third Avenue Management
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the key hedge fund action encompassing Southside Bancshares, Inc. (NASDAQ:SBSI).
How have hedgies been trading Southside Bancshares, Inc. (NASDAQ:SBSI)?
Heading into the first quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SBSI over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Southside Bancshares, Inc. (NASDAQ:SBSI) was held by Renaissance Technologies, which reported holding $42.3 million worth of stock at the end of September. It was followed by Millennium Management with a $11.6 million position. Other investors bullish on the company included Third Avenue Management, Fisher Asset Management, and Weld Capital Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Southside Bancshares, Inc. (NASDAQ:SBSI), around 0.68% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.17 percent of its 13F equity portfolio to SBSI.
Now, specific money managers were breaking ground themselves. Weld Capital Management, managed by Minhua Zhang, assembled the most valuable position in Southside Bancshares, Inc. (NASDAQ:SBSI). Weld Capital Management had $0.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Southside Bancshares, Inc. (NASDAQ:SBSI). These stocks are Lakeland Financial Corporation (NASDAQ:LKFN), TriCo Bancshares (NASDAQ:TCBK), Patrick Industries, Inc. (NASDAQ:PATK), and Silk Road Medical, Inc. (NASDAQ:SILK). This group of stocks’ market values are similar to SBSI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LKFN | 8 | 18831 | -2 |
| TCBK | 11 | 44295 | 1 |
| PATK | 18 | 124804 | 1 |
| SILK | 12 | 88513 | 4 |
| Average | 12.25 | 69111 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $64 million in SBSI’s case. Patrick Industries, Inc. (NASDAQ:PATK) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Southside Bancshares, Inc. (NASDAQ:SBSI) is even less popular than LKFN. Hedge funds dodged a bullet by taking a bearish stance towards SBSI. 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 1.0% in 2020 through May 1st but managed to beat the market by 12.9 percentage points. Unfortunately SBSI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SBSI investors were disappointed as the stock returned -18.6% 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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.
