Does Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) the right pick for your portfolio? Money managers are getting less optimistic. The number of long hedge fund bets were cut by 2 lately. Our calculations also showed that acbi isn't among the 30 most popular stocks among hedge funds.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_758440" align="aligncenter" width="450"] Michael Price of MFP Investors[/caption]
We're going to take a gander at the recent hedge fund action regarding Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI).
What does smart money think about Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in ACBI a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) was held by Mendon Capital Advisors, which reported holding $21.3 million worth of stock at the end of March. It was followed by MFP Investors with a $16.9 million position. Other investors bullish on the company included Elizabeth Park Capital Management, Renaissance Technologies, and D E Shaw.
Due to the fact that Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) has faced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there was a specific group of funds that elected to cut their full holdings heading into Q3. Interestingly, Ravi Chopra's Azora Capital dumped the biggest investment of the 700 funds watched by Insider Monkey, totaling an estimated $2.1 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also cut its stock, about $0.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI). These stocks are RTI Surgical Holdings, Inc. (NASDAQ:RTIX), Akorn, Inc. (NASDAQ:AKRX), Yintech Investment Holdings Limited (NASDAQ:YIN), and Trinity Merger Corp. (NASDAQ:TMCX). This group of stocks' market values match ACBI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RTIX,14,41155,2 AKRX,16,64437,1 YIN,2,494,0 TMCX,15,65966,1 Average,11.75,43013,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $76 million in ACBI's case. Akorn, Inc. (NASDAQ:AKRX) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 2 bullish hedge fund positions. Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ACBI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ACBI were disappointed as the stock returned -4.9% during the same 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.