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Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Sierra Bancorp (NASDAQ:BSRR).
Is Sierra Bancorp (NASDAQ:BSRR) a sound investment now? Hedge funds are getting more optimistic. The number of bullish hedge fund positions went up by 3 recently. Our calculations also showed that BSRR 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.
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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Roger Ibbotson of Zebra Capital Management[/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 based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to take a look at the key hedge fund action regarding Sierra Bancorp (NASDAQ:BSRR).
What have hedge funds been doing with Sierra Bancorp (NASDAQ:BSRR)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in BSRR a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Sierra Bancorp (NASDAQ:BSRR), which was worth $10.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $1.3 million worth of shares. Winton Capital Management, GLG Partners, and Two Sigma Advisors 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 Zebra Capital Management allocated the biggest weight to Sierra Bancorp (NASDAQ:BSRR), around 0.24% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to BSRR.
As aggregate interest increased, specific money managers were leading the bulls' herd. Winton Capital Management, managed by David Harding, established the biggest position in Sierra Bancorp (NASDAQ:BSRR). Winton Capital Management had $1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.3 million position during the quarter. The only other fund with a brand new BSRR position is Roger Ibbotson's Zebra Capital Management.
Let's check out hedge fund activity in other stocks similar to Sierra Bancorp (NASDAQ:BSRR). These stocks are Purple Innovation, Inc. (NASDAQ:PRPL), Gladstone Investment Corporation (NASDAQ:GAIN), Meridian Bioscience, Inc. (NASDAQ:VIVO), and Green Plains Inc. (NASDAQ:GPRE). All of these stocks' market caps are similar to BSRR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRPL,5,48660,2 GAIN,2,1970,-2 VIVO,16,53017,-1 GPRE,16,100604,0 Average,9.75,51063,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $15 million in BSRR's case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Gladstone Investment Corporation (NASDAQ:GAIN) is the least popular one with only 2 bullish hedge fund positions. Sierra Bancorp (NASDAQ:BSRR) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BSRR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BSRR were disappointed as the stock returned 1.6% during the fourth quarter (through the end of November) 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.