In this article we will check out the progression of hedge fund sentiment towards Bank of Commerce Holdings (NASDAQ:BOCH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Bank of Commerce Holdings (NASDAQ:BOCH) investors should be aware of a decrease in enthusiasm from smart money in recent months. Our calculations also showed that BOCH isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Roger Ibbotson of Zebra Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Bank of Commerce Holdings (NASDAQ:BOCH).
What have hedge funds been doing with Bank of Commerce Holdings (NASDAQ:BOCH)?
At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in BOCH over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Bank of Commerce Holdings (NASDAQ:BOCH) was held by EJF Capital, which reported holding $6.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.9 million position. Other investors bullish on the company included Zebra Capital Management, Winton Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Bank of Commerce Holdings (NASDAQ:BOCH), around 1.35% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.43 percent of its 13F equity portfolio to BOCH.
Due to the fact that Bank of Commerce Holdings (NASDAQ:BOCH) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds who were dropping their positions entirely last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling close to $0.2 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Bank of Commerce Holdings (NASDAQ:BOCH). These stocks are Investar Holding Corporation (NASDAQ:ISTR), Stratus Properties Inc. (NASDAQ:STRS), North American Energy Partners Inc.(USA) (NYSE:NOA), and Akazoo S.A. (NASDAQ:SONG). This group of stocks’ market values are similar to BOCH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ISTR | 7 | 14035 | 0 |
| STRS | 2 | 20497 | -1 |
| NOA | 11 | 20183 | 1 |
| SONG | 7 | 3254 | 0 |
| Average | 6.75 | 14492 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $8 million in BOCH’s case. North American Energy Partners Inc.(USA) (NYSE:NOA) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 2 bullish hedge fund positions. Bank of Commerce Holdings (NASDAQ:BOCH) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately BOCH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BOCH investors were disappointed as the stock returned -3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
