At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards First Busey Corporation (NASDAQ:BUSE).
Is BUSE a good stock to buy now? Investors who are in the know were turning bullish. The number of long hedge fund bets rose by 2 recently. First Busey Corporation (NASDAQ:BUSE) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BUSE isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Lindenbaum Basswood Capital
Matthew Lindenbaum of Basswood Capital
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 15 best blue chip stocks 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. Now we're going to take a look at the fresh hedge fund action surrounding First Busey Corporation (NASDAQ:BUSE).
Do Hedge Funds Think BUSE Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in BUSE a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in First Busey Corporation (NASDAQ:BUSE), which was worth $13.8 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $3.8 million worth of shares. Mendon Capital Advisors, Millennium Management, and Basswood Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to First Busey Corporation (NASDAQ:BUSE), around 1.39% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, designating 0.58 percent of its 13F equity portfolio to BUSE.
Now, key hedge funds were leading the bulls' herd. Bailard Inc, managed by Thomas Bailard, initiated the most valuable position in First Busey Corporation (NASDAQ:BUSE). Bailard Inc had $0.4 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.2 million investment in the stock during the quarter.
Let's now take a look at hedge fund activity in other stocks similar to First Busey Corporation (NASDAQ:BUSE). These stocks are iTeos Therapeutics, Inc. (NASDAQ:ITOS), Redwood Trust, Inc. (NYSE:RWT), Eagle Bancorp, Inc. (NASDAQ:EGBN), BGC Partners, Inc. (NASDAQ:BGCP), John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), The RMR Group Inc. (NASDAQ:RMR), and Ladder Capital Corp (NYSE:LADR). All of these stocks' market caps are similar to BUSE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ITOS,11,191852,11 RWT,15,42065,-3 EGBN,13,16947,-2 BGCP,23,110947,-5 JBSS,14,67309,0 RMR,13,80620,-1 LADR,14,25044,0 Average,14.7,76398,0 [/table]
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $32 million in BUSE's case. BGC Partners, Inc. (NASDAQ:BGCP) is the most popular stock in this table. On the other hand iTeos Therapeutics, Inc. (NASDAQ:ITOS) is the least popular one with only 11 bullish hedge fund positions. First Busey Corporation (NASDAQ:BUSE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BUSE is 53.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on BUSE as the stock returned 35.2% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow First Busey Corp (NASDAQ:BUSE)
Disclosure: None. This article was originally published at Insider Monkey.
