In this article we will check out the progression of hedge fund sentiment towards NBT Bancorp Inc. (NASDAQ:NBTB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is NBT Bancorp Inc. (NASDAQ:NBTB) undervalued? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund bets retreated by 3 in recent months. Our calculations also showed that NBTB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are viewed as underperforming, old financial tools of years past. While there are more than 8000 funds with their doors open at present, We choose to focus on the bigwigs of this club, approximately 850 funds. These hedge fund managers preside over the lion's share of the smart money's total capital, and by shadowing their matchless stock picks, Insider Monkey has spotted numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_26044" align="aligncenter" width="359"] Ken Griffin of Citadel Investment Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action regarding NBT Bancorp Inc. (NASDAQ:NBTB).
What have hedge funds been doing with NBT Bancorp Inc. (NASDAQ:NBTB)?
Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in NBTB a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in NBT Bancorp Inc. (NASDAQ:NBTB), worth close to $8 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Cliff Asness's AQR Capital Management, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to NBT Bancorp Inc. (NASDAQ:NBTB), around 0.01% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, dishing out 0.0012 percent of its 13F equity portfolio to NBTB.
Since NBT Bancorp Inc. (NASDAQ:NBTB) has experienced falling interest from the smart money, it's easy to see that there is a sect of funds that elected to cut their positions entirely heading into Q4. Interestingly, Peter Muller's PDT Partners said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, totaling close to $0.5 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dumped its stock, about $0.4 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds heading into Q4.
Let's also examine hedge fund activity in other stocks similar to NBT Bancorp Inc. (NASDAQ:NBTB). These stocks are Domtar Corporation (NYSE:UFS), CareTrust REIT, Inc. (NASDAQ:CTRE), Pacira Biosciences Inc (NASDAQ:PCRX), and Alexander's, Inc. (NYSE:ALX). This group of stocks' market values match NBTB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UFS,18,86572,-8 CTRE,7,19766,-6 PCRX,26,368951,-2 ALX,8,110151,-5 Average,14.75,146360,-5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $10 million in NBTB's case. Pacira Biosciences Inc (NASDAQ:PCRX) is the most popular stock in this table. On the other hand CareTrust REIT, Inc. (NASDAQ:CTRE) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks NBT Bancorp Inc. (NASDAQ:NBTB) is even less popular than CTRE. Hedge funds dodged a bullet by taking a bearish stance towards NBTB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately NBTB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); NBTB investors were disappointed as the stock returned -3.3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.