We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: McKinley Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Arrowstreet Capital).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Preferred Bank (NASDAQ:PFBC) but similarly valued. We will take a look at Minerva Neurosciences Inc (NASDAQ:NERV), Trupanion Inc (NYSE:TRUP), Camden National Corporation (NASDAQ:CAC), and ArcBest Corp (NASDAQ:ARCB). This group of stocks’ market caps are closest to PFBC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NERV | 11 | 105736 | -5 |
| TRUP | 10 | 35945 | 4 |
| CAC | 6 | 66695 | 0 |
| ARCB | 13 | 26835 | 2 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $50 million in PFBC’s case. ArcBest Corp (NASDAQ:ARCB) is the most popular stock in this table. On the other hand Camden National Corporation (NASDAQ:CAC) is the least popular one with only 6 bullish hedge fund positions. Preferred Bank (NASDAQ:PFBC) 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 ARCB might be a better candidate to consider taking a long position in.
Disclosure: None
