The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Old Line Bancshares, Inc. (NASDAQ:OLBK) based on those filings.
Old Line Bancshares, Inc. (NASDAQ:OLBK) investors should pay attention to a decrease in enthusiasm from smart money lately. OLBK was in 5 hedge funds’ portfolios at the end of the second quarter of 2019. There were 9 hedge funds in our database with OLBK holdings at the end of the previous quarter. Our calculations also showed that OLBK isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 40 percentage points since May 2014 through May 30, 2019 (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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the key hedge fund action encompassing Old Line Bancshares, Inc. (NASDAQ:OLBK).
Hedge fund activity in Old Line Bancshares, Inc. (NASDAQ:OLBK)
At Q2’s end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -44% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OLBK over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Mendon Capital Advisors was the largest shareholder of Old Line Bancshares, Inc. (NASDAQ:OLBK), with a stake worth $20.3 million reported as of the end of March. Trailing Mendon Capital Advisors was Renaissance Technologies, which amassed a stake valued at $10.7 million. Basswood Capital, Elizabeth Park Capital Management, and Springbok Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Because Old Line Bancshares, Inc. (NASDAQ:OLBK) has faced falling interest from the smart money, logic holds that there was a specific group of fund managers who were dropping their entire stakes last quarter. Intriguingly, Chuck Royce’s Royce & Associates dumped the biggest stake of all the hedgies tracked by Insider Monkey, valued at close to $3.3 million in stock, and Emanuel J. Friedman’s EJF Capital was right behind this move, as the fund said goodbye to about $1.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Old Line Bancshares, Inc. (NASDAQ:OLBK) but similarly valued. These stocks are Natural Resource Partners LP (NYSE:NRP), CAI International Inc (NYSE:CAI), REX American Resources Corp (NYSE:REX), and Sierra Wireless, Inc. (NASDAQ:SWIR). All of these stocks’ market caps resemble OLBK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NRP | 6 | 24394 | 1 |
| CAI | 14 | 115243 | -2 |
| REX | 8 | 40085 | 2 |
| SWIR | 10 | 66704 | -2 |
| Average | 9.5 | 61607 | -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 $62 million. That figure was $35 million in OLBK’s case. CAI International Inc (NYSE:CAI) is the most popular stock in this table. On the other hand Natural Resource Partners LP (NYSE:NRP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Old Line Bancshares, Inc. (NASDAQ:OLBK) is even less popular than NRP. Hedge funds clearly dropped the ball on OLBK 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on OLBK as the stock returned 9.5% during the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
