Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Sandy Spring Bancorp Inc. (NASDAQ:SASR) going to take off soon? The smart money is becoming more confident. The number of long hedge fund positions inched up by 1 lately. Our calculations also showed that SASR isn't among the 30 most popular stocks among hedge funds.
If you'd ask most investors, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are greater than 8000 funds trading today, Our researchers choose to focus on the top tier of this club, about 750 funds. It is estimated that this group of investors preside over bulk of the hedge fund industry's total capital, and by keeping track of their inimitable equity investments, Insider Monkey has formulated a few investment strategies that have historically defeated Mr. Market. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points a year 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.
We're going to take a gander at the recent hedge fund action surrounding Sandy Spring Bancorp Inc. (NASDAQ:SASR).
What have hedge funds been doing with Sandy Spring Bancorp Inc. (NASDAQ:SASR)?
At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in SASR a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Sandy Spring Bancorp Inc. (NASDAQ:SASR) was held by Renaissance Technologies, which reported holding $31.7 million worth of stock at the end of December. It was followed by Forest Hill Capital with a $13.2 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and Citadel Investment Group.
As one would reasonably expect, some big names were leading the bulls' herd. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the most outsized position in Sandy Spring Bancorp Inc. (NASDAQ:SASR). PEAK6 Capital Management had $0.6 million invested in the company at the end of the quarter. David Costen Haley's HBK Investments also made a $0.4 million investment in the stock during the quarter.
Let's also examine hedge fund activity in other stocks similar to Sandy Spring Bancorp Inc. (NASDAQ:SASR). These stocks are Brookline Bancorp, Inc. (NASDAQ:BRKL), Arco Platform Limited (NASDAQ:ARCE), TIER REIT, Inc. (NYSE:TIER), and Pitney Bowes Inc. (NYSE:PBI). This group of stocks' market valuations are similar to SASR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRKL,10,49831,4 ARCE,10,31773,-12 TIER,7,71133,-2 PBI,20,78677,-2 Average,11.75,57854,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $66 million in SASR's case. Pitney Bowes Inc. (NYSE:PBI) is the most popular stock in this table. On the other hand TIER REIT, Inc. (NYSE:TIER) is the least popular one with only 7 bullish hedge fund positions. Sandy Spring Bancorp Inc. (NASDAQ:SASR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 SASR wasn't nearly as popular as these 15 stock and hedge funds that were betting on SASR were disappointed as the stock returned 9.6% 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.