Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
One stock that registered an increase in attention from smart money investors last quarter is Eagle Bancorp, Inc. (NASDAQ:EGBN), in which 16 funds tracked by Insider Monkey held long positions at the end of September, compared to 12 funds at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Steelcase Inc. (NYSE:SCS), Gannett Co., Inc. (NYSE:GCI), and Shutterfly, Inc. (NASDAQ:SFLY) to gather more data points.
Follow Eagle Bancorp Inc (NASDAQ:EGBN)
Follow Eagle Bancorp Inc (NASDAQ:EGBN)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s review the latest action regarding Eagle Bancorp, Inc. (NASDAQ:EGBN).
What does the smart money think about Eagle Bancorp, Inc. (NASDAQ:EGBN)?
Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on Eagle Bancorp, which represents a gain of 33% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in EGBN heading into 2016. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Fred Cummings’ Elizabeth Park Capital Management holds the largest position in Eagle Bancorp, Inc. (NASDAQ:EGBN), having reported an $8.6 million stake, comprising 3.8% of its 13F portfolio. Coming in second is Mark Lee’s Forest Hill Capital which holds a $5.4 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Israel Englander’s Millennium Management, Ken Fisher’s Fisher Asset Management, and Matthew Lindenbaum’s Basswood Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, specific money managers have jumped into Eagle Bancorp, Inc. (NASDAQ:EGBN) headfirst. Matthew Tewksbury’s Stevens Capital Management created the most outsized position in Eagle Bancorp, Inc. (NASDAQ:EGBN). Stevens Capital Management had $0.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are David E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Eagle Bancorp, Inc. (NASDAQ:EGBN) but similarly valued. These stocks are Steelcase Inc. (NYSE:SCS), Gannett Co., Inc. (NYSE:GCI), Shutterfly, Inc. (NASDAQ:SFLY), and OM Asset Management PLC (NYSE:OMAM). This group of stocks’ market caps are closest to EGBN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCS | 18 | 68883 | -2 |
| GCI | 18 | 65906 | 2 |
| SFLY | 23 | 460368 | 1 |
| OMAM | 12 | 63974 | 1 |
As you can see these stocks had an average of 18 investors with bullish positions and the average amount invested in these stocks was $165 million, which is higher than the $32 million in EGBN’s case. Shutterfly, Inc. (NASDAQ:SFLY) is the most popular stock in this table, while OM Asset Management PLC (NYSE:OMAM) is the least popular one with only 12 bullish hedge fund positions. Eagle Bancorp, Inc. (NASDAQ:EGBN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Shutterfly, Inc. (NASDAQ:SFLY) might be a better candidate to consider taking a long position in.
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Disclosure: None
