While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding ServisFirst Bancshares, Inc. (NASDAQ:SFBS).
ServisFirst Bancshares, Inc. (NASDAQ:SFBS) investors should be aware of a decrease in activity from the world's largest hedge funds recently. SFBS was in 8 hedge funds' portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with SFBS positions at the end of the previous quarter. Our calculations also showed that SFBS 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_258236" align="alignnone" width="600"] Ken Griffin of Citadel Investment Group[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to view the new hedge fund action regarding ServisFirst Bancshares, Inc. (NASDAQ:SFBS).
What does smart money think about ServisFirst Bancshares, Inc. (NASDAQ:SFBS)?
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in SFBS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in ServisFirst Bancshares, Inc. (NASDAQ:SFBS). Citadel Investment Group has a $3.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Ken Fisher of Fisher Asset Management, with a $2.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish comprise Gregg Moskowitz's Interval Partners, Renaissance Technologies and Mario Gabelli's GAMCO Investors. In terms of the portfolio weights assigned to each position Interval Partners allocated the biggest weight to ServisFirst Bancshares, Inc. (NASDAQ:SFBS), around 0.06% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to SFBS.
Because ServisFirst Bancshares, Inc. (NASDAQ:SFBS) has faced falling interest from the smart money, it's safe to say that there was a specific group of hedgies who sold off their full holdings by the end of the third quarter. Interestingly, Ken Griffin's Citadel Investment Group cut the biggest position of the "upper crust" of funds monitored by Insider Monkey, valued at close to $0.3 million in stock. Brandon Haley's fund, Holocene Advisors, also said goodbye to its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as ServisFirst Bancshares, Inc. (NASDAQ:SFBS) but similarly valued. We will take a look at Alexander & Baldwin Inc (NYSE:ALEX), Mueller Water Products, Inc. (NYSE:MWA), PDC Energy Inc (NASDAQ:PDCE), and Zogenix, Inc. (NASDAQ:ZGNX). This group of stocks' market caps are closest to SFBS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALEX,8,20353,-2 MWA,20,282575,2 PDCE,23,231814,9 ZGNX,34,834448,6 Average,21.25,342298,3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $11 million in SFBS's case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand Alexander & Baldwin Inc (NYSE:ALEX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is even less popular than ALEX. 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 SFBS, though not to the same extent, as the stock returned 9.7% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.