Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards First Busey Corporation (NASDAQ:BUSE) to find out whether it was one of their high conviction long-term ideas.
First Busey Corporation (NASDAQ:BUSE) was in 12 hedge funds' portfolios at the end of December. BUSE shareholders have witnessed a decrease in hedge fund sentiment lately. There were 14 hedge funds in our database with BUSE positions at the end of the previous quarter. Our calculations also showed that BUSE isn't among the 30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are over 8000 funds trading at the moment, Our researchers hone in on the aristocrats of this group, approximately 750 funds. Most estimates calculate that this group of people control bulk of the hedge fund industry's total capital, and by keeping track of their inimitable equity investments, Insider Monkey has spotted several investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let's take a look at the recent hedge fund action regarding First Busey Corporation (NASDAQ:BUSE).
How are hedge funds trading First Busey Corporation (NASDAQ:BUSE)?
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BUSE over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the largest position in First Busey Corporation (NASDAQ:BUSE). Renaissance Technologies has a $22 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Basswood Capital, managed by Matthew Lindenbaum, which holds a $2.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers with similar optimism contain D. E. Shaw's D E Shaw, Dmitry Balyasny's Balyasny Asset Management and Ken Griffin's Citadel Investment Group.
Judging by the fact that First Busey Corporation (NASDAQ:BUSE) has faced a decline in interest from the smart money, we can see that there lies a certain "tier" of hedgies that slashed their positions entirely last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the biggest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $0.7 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also dropped its stock, about $0.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to First Busey Corporation (NASDAQ:BUSE). We will take a look at Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (NYSE:EDN), LivePerson, Inc. (NASDAQ:LPSN), National HealthCare Corporation (NYSE:NHC), and Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA). All of these stocks' market caps match BUSE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EDN,6,19637,-1 LPSN,17,131255,5 NHC,9,51474,-1 LTRPA,20,328843,-3 Average,13,132802,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $34 million in BUSE's case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand Empresa Distribuidora y Comercializadora Norte Sociedad Anónima (NYSE:EDN) is the least popular one with only 6 bullish hedge fund positions. First Busey Corporation (NASDAQ:BUSE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately BUSE wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); BUSE investors were disappointed as the stock returned 2.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.