Where Do Hedge Funds Stand On Stifel Financial Corp. (SF)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Stifel Financial Corp. (NYSE:SF).

Stifel Financial Corp. (NYSE:SF) was in 18 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. SF has experienced a decrease in support from the world’s most elite money managers recently. There were 21 hedge funds in our database with SF holdings at the end of June. Our calculations also showed that SF isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Ken Fisher of Fisher Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s analyze the new hedge fund action surrounding Stifel Financial Corp. (NYSE:SF).

Do Hedge Funds Think SF Is A Good Stock To Buy Now?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SF over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Is SF A Good Stock To Buy?

The largest stake in Stifel Financial Corp. (NYSE:SF) was held by Fisher Asset Management, which reported holding $61.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $28.3 million position. Other investors bullish on the company included Greenhouse Funds, AQR Capital Management, and Azora Capital. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to Stifel Financial Corp. (NYSE:SF), around 3.88% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, dishing out 1.34 percent of its 13F equity portfolio to SF.

Because Stifel Financial Corp. (NYSE:SF) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of money managers who were dropping their entire stakes last quarter. Intriguingly, Eric F. Billings’s Billings Capital Management cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $6.8 million in stock. Renaissance Technologies, also sold off its stock, about $4.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Stifel Financial Corp. (NYSE:SF). We will take a look at Brixmor Property Group Inc (NYSE:BRX), Proto Labs Inc (NYSE:PRLB), Inspire Medical Systems, Inc. (NYSE:INSP), UFP Industries, Inc. (NASDAQ:UFPI), Semtech Corporation (NASDAQ:SMTC), Alamos Gold Inc (NYSE:AGI), and Foot Locker, Inc. (NYSE:FL). This group of stocks’ market caps resemble SF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BRX 18 43439 -6
PRLB 16 21040 -1
INSP 25 462980 1
UFPI 20 93473 2
SMTC 21 151214 -4
AGI 15 403593 -1
FL 26 297082 -3
Average 20.1 210403 -1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $170 million in SF’s case. Foot Locker, Inc. (NYSE:FL) is the most popular stock in this table. On the other hand Alamos Gold Inc (NYSE:AGI) is the least popular one with only 15 bullish hedge fund positions. Stifel Financial Corp. (NYSE:SF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SF is 41.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on SF as the stock returned 49.3% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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