We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. That's a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Banner Corporation (NASDAQ:BANR) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that BANR isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our researchers look at the crème de la crème of this club, around 750 funds. It is estimated that this group of investors have their hands on the majority of the smart money's total asset base, and by watching their top equity investments, Insider Monkey has found many investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 glance at the recent hedge fund action encompassing Banner Corporation (NASDAQ:BANR).
Hedge fund activity in Banner Corporation (NASDAQ:BANR)
Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the first quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in BANR a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Banner Corporation (NASDAQ:BANR), which was worth $32.2 million at the end of the second quarter. On the second spot was Millennium Management which amassed $17.6 million worth of shares. Moreover, Forest Hill Capital, Elizabeth Park Capital Management, and D E Shaw were also bullish on Banner Corporation (NASDAQ:BANR), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Banner Corporation (NASDAQ:BANR) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of funds that decided to sell off their full holdings last quarter. Intriguingly, Daniel Johnson's Gillson Capital dropped the largest stake of the 750 funds tracked by Insider Monkey, worth about $2.2 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund dropped about $0.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Banner Corporation (NASDAQ:BANR). These stocks are Comfort Systems USA, Inc. (NYSE:FIX), Flagstar Bancorp Inc (NYSE:FBC), Ameris Bancorp (NASDAQ:ABCB), and Hostess Brands, Inc. (NASDAQ:TWNK). This group of stocks' market caps are closest to BANR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FIX,23,102393,-5 FBC,15,64461,1 ABCB,16,122661,-1 TWNK,26,282684,2 Average,20,143050,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $88 million in BANR's case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Flagstar Bancorp Inc (NYSE:FBC) is the least popular one with only 15 bullish hedge fund positions. Banner Corporation (NASDAQ:BANR) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on BANR, though not to the same extent, as the stock returned 4.5% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.