How do we determine whether Farmers National Banc Corp (NASDAQ:FMNB) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Farmers National Banc Corp (NASDAQ:FMNB) a buy, sell, or hold? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets improved by 1 in recent months. Our calculations also showed that FMNB isn’t among the 30 most popular stocks among hedge funds. FMNB was in 6 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with FMNB positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a look at the latest hedge fund action regarding Farmers National Banc Corp (NASDAQ:FMNB).
What does the smart money think about Farmers National Banc Corp (NASDAQ:FMNB)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in FMNB at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Elizabeth Park Capital Management, managed by Fred Cummings, holds the most valuable position in Farmers National Banc Corp (NASDAQ:FMNB). Elizabeth Park Capital Management has a $7.3 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, led by Jim Simons, holding a $3.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of Israel Englander’s Millennium Management, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.
As one would reasonably expect, key hedge funds were breaking ground themselves. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, established the most valuable position in Farmers National Banc Corp (NASDAQ:FMNB). Springbok Capital had $0 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to Farmers National Banc Corp (NASDAQ:FMNB). These stocks are Nautilus, Inc. (NYSE:NLS), Pimco Income Opportunity Fund (NYSE:PKO), Double Eagle Acquisition Corp. (NASDAQ:EAGLU), and Azure Power Global Limited (NYSE:AZRE). This group of stocks’ market values are similar to FMNB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NLS | 16 | 53191 | 1 |
| PKO | 1 | 3176 | -1 |
| EAGLU | 18 | 142362 | 1 |
| AZRE | 3 | 4152 | 0 |
| Average | 9.5 | 50720 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $13 million in FMNB’s case. Double Eagle Acquisition Corp. (NASDAQ:EAGLU) is the most popular stock in this table. On the other hand Pimco Income Opportunity Fund (NYSE:PKO) is the least popular one with only 1 bullish hedge fund positions. Farmers National Banc Corp (NASDAQ:FMNB) 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 EAGLU might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
