Is International Bancshares Corp (NASDAQ:IBOC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is International Bancshares Corp (NASDAQ:IBOC) worth your attention right now? Hedge funds are betting on the stock. The number of bullish hedge fund positions improved by 3 in recent months. Our calculations also showed that IBOC isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]
We're going to analyze the key hedge fund action regarding International Bancshares Corp (NASDAQ:IBOC).
How have hedgies been trading International Bancshares Corp (NASDAQ:IBOC)?
Heading into the first quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IBOC over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Polaris Capital Management, managed by Bernard Horn, holds the number one position in International Bancshares Corp (NASDAQ:IBOC). Polaris Capital Management has a $41.7 million position in the stock, comprising 1.9% of its 13F portfolio. On Polaris Capital Management's heels is Israel Englander of Millennium Management, with a $38 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Ravi Chopra's Azora Capital, Cliff Asness's AQR Capital Management and Jim Simons's Renaissance Technologies.
As aggregate interest increased, key hedge funds have jumped into International Bancshares Corp (NASDAQ:IBOC) headfirst. Weld Capital Management, managed by Minhua Zhang, initiated the most valuable position in International Bancshares Corp (NASDAQ:IBOC). Weld Capital Management had $0.7 million invested in the company at the end of the quarter. Hoon Kim's Quantinno Capital also made a $0.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is Brandon Haley's Holocene Advisors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as International Bancshares Corp (NASDAQ:IBOC) but similarly valued. We will take a look at Navient Corp (NASDAQ:NAVI), John Bean Technologies Corporation (NYSE:JBT), Acadia Healthcare Company Inc (NASDAQ:ACHC), and Monro, Inc. (NASDAQ:MNRO). This group of stocks' market values match IBOC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NAVI,29,398940,2 JBT,9,59938,-4 ACHC,18,309481,-1 MNRO,18,179953,8 Average,18.5,237078,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $133 million in IBOC's case. Navient Corp (NASDAQ:NAVI) is the most popular stock in this table. On the other hand John Bean Technologies Corporation (NYSE:JBT) is the least popular one with only 9 bullish hedge fund positions. International Bancshares Corp (NASDAQ:IBOC) is not the most popular stock in this group but hedge fund interest is still above average. 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 IBOC, though not to the same extent, as the stock returned 18.1% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.