Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Territorial Bancorp Inc (NASDAQ:TBNK) changed recently.
Is Territorial Bancorp Inc (NASDAQ:TBNK) a good investment now? Hedge funds were taking a bearish view. The number of bullish hedge fund positions fell by 1 lately. Territorial Bancorp Inc (NASDAQ:TBNK) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 8. Our calculations also showed that TBNK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $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. Keeping this in mind we’re going to go over the recent hedge fund action encompassing Territorial Bancorp Inc (NASDAQ:TBNK).
Do Hedge Funds Think TBNK Is A Good Stock To Buy Now?
At first quarter’s end, a total of 4 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 4 hedge funds with a bullish position in TBNK a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the largest position in Territorial Bancorp Inc (NASDAQ:TBNK). Renaissance Technologies has a $16.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, managed by Chuck Royce, which holds a $4.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Frederick DiSanto’s Ancora Advisors, John Overdeck and David Siegel’s Two Sigma Advisors and . In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Territorial Bancorp Inc (NASDAQ:TBNK), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to TBNK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Winton Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified TBNK as a viable investment and initiated a position in the stock.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Territorial Bancorp Inc (NASDAQ:TBNK) but similarly valued. These stocks are Galiano Gold Inc. (NYSE:GAU), Energous Corporation (NASDAQ:WATT), Orrstown Financial Services, Inc. (NASDAQ:ORRF), Stratus Properties Inc. (NASDAQ:STRS), Professional Holding Corp. (NASDAQ:PFHD), Hamilton Beach Brands Holding Company (NYSE:HBB), and Safe Bulkers, Inc. (NYSE:SB). All of these stocks’ market caps are closest to TBNK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GAU | 6 | 30594 | 1 |
| WATT | 6 | 2777 | 1 |
| ORRF | 4 | 8233 | 0 |
| STRS | 3 | 38081 | 0 |
| PFHD | 3 | 20914 | 1 |
| HBB | 8 | 10151 | 2 |
| SB | 8 | 16324 | 3 |
| Average | 5.4 | 18153 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $23 million in TBNK’s case. Hamilton Beach Brands Holding Company (NYSE:HBB) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 3 bullish hedge fund positions. Territorial Bancorp Inc (NASDAQ:TBNK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TBNK is 29. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately TBNK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TBNK investors were disappointed as the stock returned -0.8% since the end of March (through 6/11) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
