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Here’s What Hedge Funds Think About Independent Bank Group Inc (IBTX)

Reymerlyn Martin

Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won't accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Independent Bank Group Inc (NASDAQ:IBTX) an outstanding stock to buy now? Prominent investors are taking an optimistic view. The number of long hedge fund positions advanced by 2 in recent months. Our calculations also showed that IBTX isn't among the 30 most popular stocks among hedge funds.

To most shareholders, hedge funds are perceived as unimportant, outdated financial tools of the past. While there are greater than 8000 funds with their doors open today, Our researchers hone in on the crème de la crème of this club, about 750 funds. These money managers command bulk of all hedge funds' total capital, and by keeping an eye on their first-class picks, Insider Monkey has discovered several investment strategies that have historically defeated the broader indices. Insider Monkey's flagship hedge fund strategy beat 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.

Matthew Lindenbaum Basswood Capital

We're going to go over the fresh hedge fund action regarding Independent Bank Group Inc (NASDAQ:IBTX).

Hedge fund activity in Independent Bank Group Inc (NASDAQ:IBTX)

Heading into the first quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in IBTX a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

IBTX_apr2019

More specifically, Mendon Capital Advisors was the largest shareholder of Independent Bank Group Inc (NASDAQ:IBTX), with a stake worth $25.8 million reported as of the end of September. Trailing Mendon Capital Advisors was Citadel Investment Group, which amassed a stake valued at $22.8 million. Elizabeth Park Capital Management, Marshall Wace LLP, and Royce & Associates were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, key hedge funds were leading the bulls' herd. SCW Capital Management, managed by John R. Wagner, created the most valuable position in Independent Bank Group Inc (NASDAQ:IBTX). SCW Capital Management had $6.2 million invested in the company at the end of the quarter. Matthew Lindenbaum's Basswood Capital also initiated a $4.1 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel's Two Sigma Advisors and Matthew Tewksbury's Stevens Capital Management.

Let's go over hedge fund activity in other stocks similar to Independent Bank Group Inc (NASDAQ:IBTX). These stocks are Central Puerto S.A. (NYSE:CEPU), United Fire Group, Inc. (NASDAQ:UFCS), Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA), and US Ecology Inc. (NASDAQ:ECOL). All of these stocks' market caps are closest to IBTX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CEPU,8,33956,-1 UFCS,11,21284,3 KNSA,8,151336,-1 ECOL,11,10350,1 Average,9.5,54232,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $99 million in IBTX's case. United Fire Group, Inc. (NASDAQ:UFCS) is the most popular stock in this table. On the other hand Central Puerto S.A. (NYSE:CEPU) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Independent Bank Group Inc (NASDAQ:IBTX) is more popular among hedge funds. 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. Hedge funds were also right about betting on IBTX, though not to the same extent, as the stock returned 22.8% and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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