In this article we will analyze whether Allegiance Bancshares, Inc. (NASDAQ:ABTX) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Hedge fund interest in Allegiance Bancshares, Inc. (NASDAQ:ABTX) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ABTX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ABTX to other stocks including Vasta Platform Limited (NASDAQ:VSTA), Rekor Systems, Inc. (NASDAQ:REKR), and Celldex Therapeutics, Inc. (NASDAQ:CLDX) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Ken Griffin CITADEL INVESTMENT GROUP
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to take a glance at the fresh hedge fund action regarding Allegiance Bancshares, Inc. (NASDAQ:ABTX).
Do Hedge Funds Think ABTX Is A Good Stock To Buy Now?
At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ABTX over the last 23 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Allegiance Bancshares, Inc. (NASDAQ:ABTX), with a stake worth $5 million reported as of the end of March. Trailing Royce & Associates was Citadel Investment Group, which amassed a stake valued at $3.3 million. AQR Capital Management, PDT Partners, and Citadel Investment Group 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 Royce & Associates allocated the biggest weight to Allegiance Bancshares, Inc. (NASDAQ:ABTX), around 0.03% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to ABTX.
Seeing as Allegiance Bancshares, Inc. (NASDAQ:ABTX) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there was a specific group of funds who were dropping their entire stakes by the end of the first quarter. Interestingly, Minhua Zhang's Weld Capital Management cut the largest position of the 750 funds monitored by Insider Monkey, comprising about $0.2 million in stock. David Harding's fund, Winton Capital Management, also sold off its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Allegiance Bancshares, Inc. (NASDAQ:ABTX). We will take a look at Vasta Platform Limited (NASDAQ:VSTA), Rekor Systems, Inc. (NASDAQ:REKR), Celldex Therapeutics, Inc. (NASDAQ:CLDX), Horizon Bancorp, Inc. (NASDAQ:HBNC), Energy Fuels Inc (NYSE:UUUU), Photronics, Inc. (NASDAQ:PLAB), and UMH Properties, Inc (NYSE:UMH). This group of stocks' market valuations are similar to ABTX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VSTA,4,14845,-4 REKR,13,107961,6 CLDX,26,297912,1 HBNC,8,13576,-2 UUUU,12,8429,4 PLAB,16,77658,-5 UMH,7,11950,2 Average,12.3,76047,0.3 [/table]
As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $10 million in ABTX's case. Celldex Therapeutics, Inc. (NASDAQ:CLDX) is the most popular stock in this table. On the other hand Vasta Platform Limited (NASDAQ:VSTA) is the least popular one with only 4 bullish hedge fund positions. Allegiance Bancshares, Inc. (NASDAQ:ABTX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ABTX is 23.9. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately ABTX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ABTX investors were disappointed as the stock returned -4.8% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
