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In this article we will check out the progression of hedge fund sentiment towards Zions Bancorporation, National Association (NASDAQ:ZION) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Zions Bancorporation, National Association (NASDAQ:ZION) a cheap investment right now? The smart money was reducing their bets on the stock. The number of bullish hedge fund bets were trimmed by 4 in recent months. Zions Bancorporation, National Association (NASDAQ:ZION) was in 24 hedge funds' portfolios at the end of March. The all time high for this statistic is 45. Our calculations also showed that ZION isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Fred Cummings of Elizabeth Park Capital
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Do Hedge Funds Think ZION Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ZION over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Millennium Management was the largest shareholder of Zions Bancorporation, National Association (NASDAQ:ZION), with a stake worth $56 million reported as of the end of March. Trailing Millennium Management was D E Shaw, which amassed a stake valued at $34.3 million. AQR Capital Management, 59 North Capital, and Elizabeth Park Capital Management 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 0 allocated the biggest weight to Zions Bancorporation, National Association (NASDAQ:ZION), around 4.88% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 3.58 percent of its 13F equity portfolio to ZION.
Seeing as Zions Bancorporation, National Association (NASDAQ:ZION) has faced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers that decided to sell off their entire stakes heading into Q2. Intriguingly, Dmitry Balyasny's Balyasny Asset Management sold off the largest stake of the 750 funds watched by Insider Monkey, valued at an estimated $31.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dropped its stock, about $10.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q2.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Zions Bancorporation, National Association (NASDAQ:ZION) but similarly valued. These stocks are Commerce Bancshares, Inc. (NASDAQ:CBSH), Store Capital Corporation (NYSE:STOR), RealPage, Inc. (NASDAQ:RP), Albertsons Companies, Inc. (NYSE:ACI), Vereit Inc (NYSE:VER), Robert Half International Inc. (NYSE:RHI), and Natera Inc (NASDAQ:NTRA). This group of stocks' market caps are similar to ZION's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBSH,13,73163,-3 STOR,13,886150,1 RP,50,2495942,2 ACI,19,2807778,0 VER,27,664502,4 RHI,27,284866,0 NTRA,41,1222395,-5 Average,27.1,1204971,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $1205 million. That figure was $194 million in ZION's case. RealPage, Inc. (NASDAQ:RP) is the most popular stock in this table. On the other hand Commerce Bancshares, Inc. (NASDAQ:CBSH) is the least popular one with only 13 bullish hedge fund positions. Zions Bancorporation, National Association (NASDAQ:ZION) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ZION is 31.9. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately ZION wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ZION investors were disappointed as the stock returned -9.2% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.