In a 13D filing with the SEC on Sierra Bancorp (NASDAQ:BSRR), Matthew Lindenbaum’s Basswood Capital Management disclosed an ownership stake of 1.07 million shares in the parent of Bank of the Sierra, which represents 7.85% of its outstanding common stock. This is down 13.20% from the 1.23 million shares reported in the fund’s most recent 13F filing with the Securities and Exchange Commission.
Basswood Capital Management LLC is a long/short equity hedge fund co-established by Matthew and Bennett Lindenbaum in 1998. The investment management firm employs value-oriented, event-driven strategies and currently has approximately $2.61 billion in assets under management. Matthew Amiel Lindenbaum, a Principal and Portfolio Manager at Basswood Capital Management, started his finance career with the Mortgage Finance Group at Merrill Lynch Capital Markets, where he structured derivative mortgage securities and advised banks on financial strategies. Later on in his career, he joined SNL Securities LLC, where he eventually embarked on the position of General Partner. Therefore, the extensive expertise of Matthew Lindenbaum in the banking sector, as well as his exceptional track record throughout his financial career, played a crucial role in the success of Basswood Capital Management. According to its most recent 13F filing with the SEC, Lindenbaum’s hedge fund manages a public equity portfolio with a market value of $2.10 billion, while the finance sector accounts for 84% of its entire portfolio.
Follow Matthew Lindenbaum's Basswood Capital
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 66 percentage points (123% return vs. the S&P 500’s 57% gain) over the last 34 months (see the details here).
Sierra Bancorp (NASDAQ:BSRR) is the holding company for Bank of the Sierra, which is the largest independent bank headquartered in the South San Joaquin Valley, with over $1.7 billion in total assets. Bank of the Sierra is a state-chartered bank that offers a wide portfolio of retail and commercial banking services to communities in the central and southern sections of the San Joaquin Valley. The bank maintains a diversified loan portfolio and also provides a range of deposit products for retail and business banking markets, including checking accounts, interest-bearing transactions accounts, and retirement accounts, to name just a few. The shares of Sierra Bancorp have decreased by slightly over 6% since the beginning of the current year, partly owing to the slump in its share price after the company revealed its financial results for the second quarter of 2015.
Sierra Bancorp released its earnings data on July 20 and the stock price slumped despite the seemingly strong financial figures. The bank posted net income of $4.56 million for the second quarter of the current year, which marked an increase of 8% year-over-year. Moreover, Sierra Bancorp delivered diluted earnings per share of $0.33, compared to the $0.30 figure reported in the same quarter a year ago. It is also worth noting that the diluted earnings per share figure beat the analysts’ estimates of $0.31, so the slump in the company’s share price seems quite bizarre. But as the Efficient-market hypothesis suggests, the market as a whole is always right. It might be the case that the market expected even stronger financial results on behalf of Sierra Bancorp, given that other banks in the industry had delivered very strong second quarter results. Even more to that, let’s not forget to mention that the company did not meet the analysts’ estimates on revenue. Sierra Bancorp posted revenue of $19.70 million for the quarter, compared to the consensus estimate of $19.75 million. However, Kevin McPhaill, the President and CEO of Sierra Bancorp, appeared to be very positive and optimistic about the company’s financial performance. He mentioned that the bank experienced exceptional growth in both loans and core deposits as a result of its focused business development efforts.
Earlier this year, Sierra Bancorp announced the approval of an additional share repurchase program amounting to 500,000 shares, which represent roughly 4% of the company’s total outstanding shares. Sierra Bancorp had previously repurchased 700,000 shares during the period of March 2014 through March 2015. Therefore, the additional repurchases may enhance the earnings per share the company will be posting in the upcoming quarters. Sierra Bancorp claimed that its improved financial performance over the last months and quarters allowed the company to pursue this activity. So it should not be a surprise if the bank delivers earnings per share figures that beat the EPS figures previously reported. Within our database, Joshua Nash’s Ulysses Management is among the largest shareholders in Sierra Bancorp (NASDAQ:BSRR), holding 126,646 shares as of March 31.
Disclosure: None
