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Is Tristate Capital Holdings (TSC) a Smart Long-term Buy?

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·3 min read
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Heartland Value Fund recently released its third-quarter investor letter – a copy of which is available for download here. The fund posted a return of 6.6% for the quarter, outperforming its benchmark, the Russell 2000 Value Index which returned 2.6% in the same quarter. You should check out Heartland's top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Heartland Advisors highlighted a few stocks and Tristate Capital Holdings Inc. (NASDAQ:TSC) is one of them. Tristate Capital Holdings Inc. (NASDAQ:TSC) is a bank holding company. Year-to-date, Tristate Capital Holdings Inc. (NASDAQ:TSC) stock lost 35.2% and on December 21st it had a closing price of $16.92. Here is what Heartland Advisors said:

"In contrast to the recent new highs by the popular market indices, shares of many small cap banks are off 50% or more. With interest rates at historic lows, investors have avoided this industry due to compression of net interest margin and potential credit risk.

In our view, widespread abandonment of the group has created opportunities in well-run, unique franchises. A long-time favorite of ours, TriState Capital Holdings Inc. (TSC), is an example of the bargains available.

Headquartered in Pittsburgh, TriState is a branchless bank with a terrific record of growth—driven by double-digit percentage gains in deposits and loans. In less than five years, assets have tripled to over $9 billion. The bank’s efficiency is outstanding with revenue per employee of $650k, twice the median for peers.

TriState has a differentiated product line led by a unique private banking model with $4 billion in assets serving a network of high net worth clients throughout America. The offering has been growing double digits and since inception has had zero losses. Fortune has ranked Tristate in their 100 fastest growing companies list three years in a row.

Overall loan quality is outstanding, with non-performing debt to total loans of just .09%. We believe the company has strong management and are impressed by their 9% stake in the company. During the recent selloff, leadership has continued to buy shares.

With shares priced below book value at a single-digit multiple to earnings, we believe TriState represents an exceptional opportunity."

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In Q3 2020, the number of bullish hedge fund positions on Tristate Capital Holdings Inc. (NASDAQ:TSC) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Tristate Capital Holdings Inc. (NASDAQ:TSC) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

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