Is Zions Bancorporation, National Association (NASDAQ:ZION) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Zions Bancorporation, National Association (NASDAQ:ZION) was in 35 hedge funds' portfolios at the end of the second quarter of 2019. ZION shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. There were 44 hedge funds in our database with ZION holdings at the end of the previous quarter. Our calculations also showed that ZION isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to 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 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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the recent hedge fund action surrounding Zions Bancorporation, National Association (NASDAQ:ZION).
What have hedge funds been doing with Zions Bancorporation, National Association (NASDAQ:ZION)?
At Q2's end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in ZION over the last 16 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Zions Bancorporation, National Association (NASDAQ:ZION) was held by Millennium Management, which reported holding $103.1 million worth of stock at the end of March. It was followed by Highbridge Capital Management with a $69.1 million position. Other investors bullish on the company included Renaissance Technologies, Two Sigma Advisors, and Arrowstreet Capital.
Since Zions Bancorporation, National Association (NASDAQ:ZION) has experienced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there was a specific group of hedgies that elected to cut their full holdings heading into Q3. Interestingly, Clint Carlson's Carlson Capital sold off the biggest position of the 750 funds followed by Insider Monkey, valued at an estimated $31.7 million in stock, and Anand Parekh's Alyeska Investment Group was right behind this move, as the fund dumped about $5.9 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 9 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to Zions Bancorporation, National Association (NASDAQ:ZION). These stocks are Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ), Teradyne, Inc. (NYSE:TER), Cypress Semiconductor Corporation (NASDAQ:CY), and Caesars Entertainment Corp (NASDAQ:CZR). This group of stocks' market caps are closest to ZION's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JAZZ,20,744942,-7 TER,27,684058,3 CY,36,1306956,11 CZR,48,3654846,-9 Average,32.75,1597701,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1598 million. That figure was $544 million in ZION's case. Caesars Entertainment Corp (NASDAQ:CZR) is the most popular stock in this table. On the other hand Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ) is the least popular one with only 20 bullish hedge fund positions. Zions Bancorporation, National Association (NASDAQ:ZION) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ZION wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ZION were disappointed as the stock returned -2.4% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.