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Is Community Trust Bancorp, Inc. (NASDAQ:CTBI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is CTBI a good stock to buy now? The smart money was getting more bullish. The number of bullish hedge fund positions advanced by 2 lately. Community Trust Bancorp, Inc. (NASDAQ:CTBI) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that CTBI 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ian Wace of Marshall Wace
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 take a peek at the fresh hedge fund action regarding Community Trust Bancorp, Inc. (NASDAQ:CTBI).
Do Hedge Funds Think CTBI Is A Good Stock To Buy Now?
At third quarter's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CTBI over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Community Trust Bancorp, Inc. (NASDAQ:CTBI) was held by Renaissance Technologies, which reported holding $8.4 million worth of stock at the end of September. It was followed by Millennium Management with a $1.9 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and AQR Capital Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Community Trust Bancorp, Inc. (NASDAQ:CTBI), around 0.02% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CTBI.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Community Trust Bancorp, Inc. (NASDAQ:CTBI). Arrowstreet Capital had $1.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Ken Griffin's Citadel Investment Group and D. E. Shaw's D E Shaw.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Community Trust Bancorp, Inc. (NASDAQ:CTBI) but similarly valued. These stocks are ScanSource, Inc. (NASDAQ:SCSC), Anika Therapeutics, Inc. (NASDAQ:ANIK), Lakeland Bancorp, Inc. (NASDAQ:LBAI), Origin Bancorp, Inc. (NASDAQ:OBNK), TCG BDC, Inc. (NASDAQ:CGBD), Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), and Fusion Pharmaceuticals Inc. (NASDAQ:FUSN). This group of stocks' market valuations match CTBI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCSC,10,43718,-3 ANIK,15,52564,2 LBAI,11,22382,-2 OBNK,6,9369,0 CGBD,6,28998,-2 NLTX,19,196607,0 FUSN,10,139823,-9 Average,11,70494,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $15 million in CTBI's case. Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) is the most popular stock in this table. On the other hand Origin Bancorp, Inc. (NASDAQ:OBNK) is the least popular one with only 6 bullish hedge fund positions. Community Trust Bancorp, Inc. (NASDAQ:CTBI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTBI is 47.4. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CTBI as the stock returned 26.8% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.