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What do the top hedge fund and mutual fund gurus like in the regional banking industry? This article, No. 12 in a series, identifies through research of the latest available institutional 13-F filings the gurus who are most invested in the regional banking Industry, and the specific regional banks they prefer to hold in their hedge fund portfolios. The first 11 articles in the series identified gurus who are overweight in the solar sector, utilities sector, China stocks, airline sector, optical networking sector, chemicals industry, oil and gas exploration industry, the automobile industry, the biotech industry, the consumer non-durable goods sector and the gold and silver mining industry, and the stocks within those sectors they hold in their portfolios (for those familiar with the series, skip over to the fifth paragraph).
A guru is defined as someone who is regarded as having great knowledge, wisdom and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffett, George Soros, Carl Icahn and Julian Robertson. But the hedge fund community alone includes over 9,000 funds. Add in mutual funds, ETFs and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of gurus, less than 1%, or between 100 to 200 fund managers, are commonly believed by the larger investment community to have earned the distinction of being called gurus.
The study of the investing habits of gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the U.S. equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading regional banking stocks is approximately $140 billion, or 0.93% of the overall market. The table lists four investment gurus whose funds have invested over two times that or at least 1.86% in regional banks. The following is a list of their picks:
  • Puerto-Rico based Popular Inc (NASDAQ:BPOP) operates 194 branches in Puerto Rico, the Caribbean and the U.S.
  • Northeast Regional Banks: Sun Bancorp NJ (NASDAQ:SNBC), operating via 70 offices in New Jersey; Susquehanna (NASDAQ:SUSQ) operates 221 branches in PA, NJ, MD and WV; People’s United Financial (NASDAQ:PBCT) operates via 302 offices throughout CT, CT, NH, ME, MA and NY; Danvers Bancorp Inc. (NASDAQ:DNBK) operates 26 offices in MA.
  • Southeast Regional Banks: First Horizon National Corp. (NYSE:FHN) operates 184 financial centers in TN, GA and MS; and Iberiabank Corporation (NASDAQ:IBKC) operates via 136 offices in LA, AK, FL, AL, TN and TX; Porter Bancorp Inc (NASDAQ:PBIB) operates via 18 branches in KY.
  • Midwest Regional Banks: Associated Banc Corp. (NASDAQ:ASBC) operates via 280 offices in WI, IL and MN; Commerce Bancshares (NASDAQ:CBSH) operates via 209 branches in KS, MO, IL, OK and CO; Wintrust Financial Corp. (NASDAQ:WTFC) operates 86 branches in IL and WI; Firstmerit Corporation (NASDAQ:FMER) operates 207 offices in OH, IL and PA; MB Financial Inc (NASDAQ:MBFI) operates 90 offices in Chicago and Philadelphia.
  • West/ Southwest Regional Bank Glacier Bancorp Inc. (NASDAQ:GBCI) operates 97 offices in MT, ID, WY, CO, UT and WA.
Table
Fund and Guru
Type of Fund
Assets Under Management
Percent Portfolio in the Regional Banking Industry
Major Regional Bank positions in Portfolio
Invesco Private Capital, Inc. (Wilbur Ross)
Hedge Fund - Distressed Investing
$ 920 million
6.3%
SNBC
RS Investment Management Co LLC
Mutual Fund
$ 11.6 billion
5.0%
FHN, ASBC, CBSH, SUSQ, IBKC
Clinton Group Inc. (George Hall)
Hedge Fund - Multi-strategy
$ 3.5 billion including $131 million in equities
3.3%
PBIB, PBCT, BPOP
Keeley Fund Management (John Keeley)
Mutual Fund - Small-Cap Equities
$ 6.2 billion
2.0%
IBKC, WTFC, FMER, DNBK, MBFI, GBCI, BPOP
Wilbur Ross is the founder of hedge fund Invesco Private Capital. He specialized in leverage buyouts (LBOs) and is well known for investing in distressed companies and restructuring failed companies.
RS Investment Management is a mutual fund company with $11.6 billion assets under management in a variety of funds focused on value, core growth, international, natural resources and fixed income.
Hedge Fund Clinton Group, founded by George Hall in 1991, is focused on mortgage-backed securities, convertible bonds, global fixed income and a multi-strategy fund.
John Keeley is portfolio manager for the $6.2 billion Mutual Fund Keeley Fund Management. He focuses on the small-capitalization sector of the equities market, and focuses on companies undergoing corporate events such as spin-offs, companies emerging from bankruptcy, and distressed utilities.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks Investment Research, Thomson Reuters and Briefing.com. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The content of this article does not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: Top Regional Bank Picks by Fund Gurus Concentrated in the Sector