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We can judge whether Guaranty Bancshares, Inc. (NASDAQ:GNTY) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Guaranty Bancshares, Inc. (NASDAQ:GNTY) investors should be aware of an increase in hedge fund sentiment lately. GNTY was in 4 hedge funds' portfolios at the end of September. There were 3 hedge funds in our database with GNTY holdings at the end of the previous quarter. Our calculations also showed that GNTY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a glance at the latest hedge fund action regarding Guaranty Bancshares, Inc. (NASDAQ:GNTY).
How are hedge funds trading Guaranty Bancshares, Inc. (NASDAQ:GNTY)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GNTY over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in Guaranty Bancshares, Inc. (NASDAQ:GNTY). Renaissance Technologies has a $2.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Anton Schutz's Mendon Capital Advisors, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Guaranty Bancshares, Inc. (NASDAQ:GNTY), around 0.07% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0023 percent of its 13F equity portfolio to GNTY.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Guaranty Bancshares, Inc. (NASDAQ:GNTY). Citadel Investment Group had $0.4 million invested in the company at the end of the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Guaranty Bancshares, Inc. (NASDAQ:GNTY) but similarly valued. These stocks are Macatawa Bank Corporation (NASDAQ:MCBC), Agenus Inc (NASDAQ:AGEN), Calix Inc (NYSE:CALX), and Health Insurance Innovations Inc (NASDAQ:HIIQ). This group of stocks' market valuations match GNTY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MCBC,7,26349,2 AGEN,8,7665,2 CALX,14,82824,0 HIIQ,15,90739,-4 Average,11,51894,0 [/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 $52 million. That figure was $4 million in GNTY's case. Health Insurance Innovations Inc (NASDAQ:HIIQ) is the most popular stock in this table. On the other hand Macatawa Bank Corporation (NASDAQ:MCBC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Guaranty Bancshares, Inc. (NASDAQ:GNTY) is even less popular than MCBC. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on GNTY, though not to the same extent, as the stock returned 8% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.