The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Bank7 Corp. (NASDAQ:BSVN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Hedge fund interest in Bank7 Corp. (NASDAQ:BSVN) shares was flat at the end of last quarter. This is usually a negative indicator. 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 EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), KVH Industries, Inc. (NASDAQ:KVHI), and Fulgent Genetics, Inc. (NASDAQ:FLGT) to gather more data points. Our calculations also showed that BSVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to check out the latest hedge fund action encompassing Bank7 Corp. (NASDAQ:BSVN).
What does smart money think about Bank7 Corp. (NASDAQ:BSVN)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in BSVN a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Mendon Capital Advisors was the largest shareholder of Bank7 Corp. (NASDAQ:BSVN), with a stake worth $7 million reported as of the end of September. Trailing Mendon Capital Advisors was Azora Capital, which amassed a stake valued at $3.1 million. Millennium Management was 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 Bank7 Corp. (NASDAQ:BSVN), around 1.18% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, dishing out 0.68 percent of its 13F equity portfolio to BSVN.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Bank7 Corp. (NASDAQ:BSVN) but similarly valued. We will take a look at EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), KVH Industries, Inc. (NASDAQ:KVHI), Fulgent Genetics, Inc. (NASDAQ:FLGT), and Community Bankers Trust Corporation (NASDAQ:ESXB). This group of stocks’ market caps are similar to BSVN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EYPT | 4 | 1227 | 0 |
| KVHI | 5 | 14257 | 2 |
| FLGT | 5 | 4358 | 2 |
| ESXB | 3 | 18197 | -1 |
| Average | 4.25 | 9510 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $12 million in BSVN’s case. KVH Industries, Inc. (NASDAQ:KVHI) is the most popular stock in this table. On the other hand Community Bankers Trust Corporation (NASDAQ:ESXB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Bank7 Corp. (NASDAQ:BSVN) is even less popular than ESXB. Hedge funds dodged a bullet by taking a bearish stance towards BSVN. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BSVN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BSVN investors were disappointed as the stock returned 0.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.