Hedge Funds Are Buying Mercantile Bank Corp. (MBWM)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Mercantile Bank Corp. (NASDAQ:MBWM) based on that data.

Is Mercantile Bank Corp. (NASDAQ:MBWM) ready to rally soon? The best stock pickers were in a bullish mood. The number of bullish hedge fund positions advanced by 2 recently. Mercantile Bank Corp. (NASDAQ:MBWM) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. Our calculations also showed that MBWM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

At the moment there are dozens of gauges shareholders employ to evaluate stocks. A pair of the most under-the-radar gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top money managers can trounce the broader indices by a solid amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to check out the fresh hedge fund action surrounding Mercantile Bank Corp. (NASDAQ:MBWM).

Do Hedge Funds Think MBWM Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in MBWM a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in Mercantile Bank Corp. (NASDAQ:MBWM) was held by Renaissance Technologies, which reported holding $24.3 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $1.5 million position. Other investors bullish on the company included Arrowstreet Capital, AQR Capital Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Mercantile Bank Corp. (NASDAQ:MBWM), around 0.03% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.0015 percent of its 13F equity portfolio to MBWM.

Consequently, key hedge funds have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, established the most valuable position in Mercantile Bank Corp. (NASDAQ:MBWM). AQR Capital Management had $0.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.3 million investment in the stock during the quarter.

Let’s also examine hedge fund activity in other stocks similar to Mercantile Bank Corp. (NASDAQ:MBWM). We will take a look at AVROBIO, Inc. (NASDAQ:AVRO), Miller Industries, Inc. (NYSE:MLR), Terns Pharmaceuticals, Inc. (NASDAQ:TERN), Avadel Pharmaceuticals plc (NASDAQ:AVDL), Altimmune, Inc. (NASDAQ:ALT), NetSTREIT Corp. (NYSE:NTST), and CorePoint Lodging Inc. (NYSE:CPLG). This group of stocks’ market values are similar to MBWM’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $28 million in MBWM’s case. Avadel Pharmaceuticals plc (NASDAQ:AVDL) is the most popular stock in this table. On the other hand Miller Industries, Inc. (NYSE:MLR) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Mercantile Bank Corp. (NASDAQ:MBWM) is even less popular than MLR. Our overall hedge fund sentiment score for MBWM is 27. 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 dodged a bullet by taking a bearish stance towards MBWM. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately MBWM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); MBWM investors were disappointed as the stock returned -5.2% since the end of the first quarter (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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