At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Old Point Financial Corporation (NASDAQ:OPOF).
Is Old Point Financial Corporation (NASDAQ:OPOF) a bargain? Money managers are getting less bullish. The number of bullish hedge fund bets dropped by 1 lately. Our calculations also showed that OPOF 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). OPOF was in 3 hedge funds’ portfolios at the end of March. There were 4 hedge funds in our database with OPOF positions at the end of the previous quarter.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the latest hedge fund action encompassing Old Point Financial Corporation (NASDAQ:OPOF).
What does smart money think about Old Point Financial Corporation (NASDAQ:OPOF)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OPOF over the last 18 quarters. So, let’s review 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, Fourthstone LLC, managed by Phil Stone, holds the number one position in Old Point Financial Corporation (NASDAQ:OPOF). Fourthstone LLC has a $3.6 million position in the stock, comprising 3.3% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $0.5 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 Fourthstone LLC allocated the biggest weight to Old Point Financial Corporation (NASDAQ:OPOF), around 3.31% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.0008 percent of its 13F equity portfolio to OPOF.
Because Old Point Financial Corporation (NASDAQ:OPOF) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of hedgies that decided to sell off their positions entirely by the end of the third quarter. At the top of the heap, Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $2.1 million in stock. Lawrence Seidman’s fund, Seidman Investment Partnership, also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Old Point Financial Corporation (NASDAQ:OPOF). We will take a look at Ultralife Corp. (NASDAQ:ULBI), Severn Bancorp Inc (NASDAQ:SVBI), Five Prime Therapeutics Inc (NASDAQ:FPRX), and Escalade, Inc. (NASDAQ:ESCA). This group of stocks’ market values are closest to OPOF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ULBI | 3 | 1619 | 0 |
| SVBI | 4 | 11769 | 0 |
| FPRX | 16 | 29194 | -3 |
| ESCA | 3 | 5879 | 0 |
| Average | 6.5 | 12115 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $5 million in OPOF’s case. Five Prime Therapeutics Inc (NASDAQ:FPRX) is the most popular stock in this table. On the other hand Ultralife Corp. (NASDAQ:ULBI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Old Point Financial Corporation (NASDAQ:OPOF) is even less popular than ULBI. Hedge funds dodged a bullet by taking a bearish stance towards OPOF. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately OPOF wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); OPOF investors were disappointed as the stock returned 2.2% during the second quarter (through May 22nd) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
