Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Professional Holding Corp. (NASDAQ:PFHD)? The smart money sentiment can provide an answer to this question.
Professional Holding Corp. (NASDAQ:PFHD) investors should pay attention to a decrease in hedge fund interest recently. Professional Holding Corp. (NASDAQ:PFHD) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 5. There were 4 hedge funds in our database with PFHD positions at the end of the second quarter. Our calculations also showed that PFHD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are dozens of methods stock traders employ to value publicly traded companies. A couple of the most useful methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outclass the broader indices by a very impressive margin (see the details here).
Anton Schutz of Mendon Capital Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s go over the latest hedge fund action encompassing Professional Holding Corp. (NASDAQ:PFHD).
How have hedgies been trading Professional Holding Corp. (NASDAQ:PFHD)?
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in PFHD a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, EJF Capital, managed by Emanuel J. Friedman, holds the most valuable position in Professional Holding Corp. (NASDAQ:PFHD). EJF Capital has a $7.3 million position in the stock, comprising 0.6% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Professional Holding Corp. (NASDAQ:PFHD), around 0.61% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to PFHD.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Driehaus Capital. 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 none of the 750+ hedge funds tracked by Insider Monkey identified PFHD as a viable investment and initiated a position in the stock.
Let’s also examine hedge fund activity in other stocks similar to Professional Holding Corp. (NASDAQ:PFHD). We will take a look at Eagle Bulk Shipping Inc. (NASDAQ:EGLE), Unity Biotechnology, Inc. (NASDAQ:UBX), Moneygram International Inc (NASDAQ:MGI), Tilly’s Inc (NYSE:TLYS), OptiNose, Inc. (NASDAQ:OPTN), SWK Holdings Corporation (NASDAQ:SWKH), and Contango Oil & Gas Company (NYSE:MCF). This group of stocks’ market values are closest to PFHD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EGLE | 3 | 71453 | -4 |
| UBX | 5 | 1840 | -2 |
| MGI | 9 | 16462 | 1 |
| TLYS | 14 | 26711 | -1 |
| OPTN | 11 | 22447 | 2 |
| SWKH | 3 | 143747 | -1 |
| MCF | 3 | 2678 | 0 |
| Average | 6.9 | 40763 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $8 million in PFHD’s case. Tilly’s Inc (NYSE:TLYS) is the most popular stock in this table. On the other hand Eagle Bulk Shipping Inc. (NASDAQ:EGLE) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Professional Holding Corp. (NASDAQ:PFHD) is even less popular than EGLE. Our overall hedge fund sentiment score for PFHD is 22. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on PFHD as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on PFHD as the stock returned 11.6% since Q3 (through November 23rd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
