World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Banner Corporation (NASDAQ:BANR) going to take off soon? Hedge funds are becoming less confident. The number of long hedge fund positions were trimmed by 2 recently. Our calculations also showed that banr isn't among the 30 most popular stocks among hedge funds. BANR was in 18 hedge funds' portfolios at the end of December. There were 20 hedge funds in our database with BANR positions at the end of the previous quarter.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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.
Let's analyze the key hedge fund action regarding Banner Corporation (NASDAQ:BANR).
How are hedge funds trading Banner Corporation (NASDAQ:BANR)?
At Q4's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the second quarter of 2018. On the other hand, there were a total of 16 hedge funds with a bullish position in BANR a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Banner Corporation (NASDAQ:BANR) was held by Citadel Investment Group, which reported holding $14.5 million worth of stock at the end of September. It was followed by Millennium Management with a $14 million position. Other investors bullish on the company included Elizabeth Park Capital Management, Forest Hill Capital, and GLG Partners.
Since Banner Corporation (NASDAQ:BANR) has experienced a decline in interest from the smart money, we can see that there lies a certain "tier" of hedgies who sold off their positions entirely by the end of the third quarter. At the top of the heap, Brandon Haley's Holocene Advisors dropped the largest stake of all the hedgies monitored by Insider Monkey, worth about $0.7 million in call options, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $0.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to Banner Corporation (NASDAQ:BANR). We will take a look at Urban Edge Properties (NYSE:UE), Tanger Factory Outlet Centers Inc. (NYSE:SKT), American Assets Trust, Inc (NYSE:AAT), and Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). All of these stocks' market caps resemble BANR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UE,12,75333,0 SKT,14,77195,3 AAT,14,102948,3 CCO,13,70697,0 Average,13.25,81543,1.5 [/table]
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As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $85 million in BANR's case. Tanger Factory Outlet Centers Inc. (NYSE:SKT) is the most popular stock in this table. On the other hand Urban Edge Properties (NYSE:UE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Banner Corporation (NASDAQ:BANR) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately BANR wasn't nearly as popular as these 15 stock and hedge funds that were betting on BANR were disappointed as the stock returned 2.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.