The financial regulations require hedge funds and wealthy investors that exceeded 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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded United Security Bancshares (NASDAQ:UBFO) based on those filings.
United Security Bancshares (NASDAQ:UBFO) investors should pay attention to a decrease in hedge fund interest in recent months. UBFO was in 3 hedge funds’ portfolios at the end of March. There were 5 hedge funds in our database with UBFO holdings at the end of the previous quarter. Our calculations also showed that UBFO 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.
According to most traders, hedge funds are seen as underperforming, old investment tools of the past. While there are over 8000 funds in operation at the moment, Our researchers hone in on the masters of this club, around 850 funds. These investment experts manage bulk of the smart money’s total capital, and by following their finest equity investments, Insider Monkey has determined numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Roger Ibbotson of Zebra Capital 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. Now we’re going to analyze the latest hedge fund action surrounding United Security Bancshares (NASDAQ:UBFO).
How are hedge funds trading United Security Bancshares (NASDAQ:UBFO)?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UBFO over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of United Security Bancshares (NASDAQ:UBFO), with a stake worth $1.7 million reported as of the end of September. Trailing Renaissance Technologies was Zebra Capital Management, which amassed a stake valued at $0.2 million. Arrowstreet Capital was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to United Security Bancshares (NASDAQ:UBFO), around 0.37% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0016 percent of its 13F equity portfolio to UBFO.
Since United Security Bancshares (NASDAQ:UBFO) has experienced a decline in interest from hedge fund managers, logic holds that there was a specific group of money managers that elected to cut their entire stakes heading into Q4. At the top of the heap, Fred Cummings’s Elizabeth Park Capital Management dropped the biggest investment of the 750 funds followed by Insider Monkey, valued at close to $0.6 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to United Security Bancshares (NASDAQ:UBFO). We will take a look at Castlight Health Inc (NYSE:CSLT), Savara, Inc. (NASDAQ:SVRA), ObsEva SA (NASDAQ:OBSV), and Caledonia Mining Corporation Plc (NYSE:CMCL). This group of stocks’ market values are similar to UBFO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSLT | 13 | 18972 | -4 |
| SVRA | 11 | 20457 | -3 |
| OBSV | 8 | 11506 | 0 |
| CMCL | 3 | 2199 | 2 |
| Average | 8.75 | 13284 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $2 million in UBFO’s case. Castlight Health Inc (NYSE:CSLT) is the most popular stock in this table. On the other hand Caledonia Mining Corporation Plc (NYSE:CMCL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks United Security Bancshares (NASDAQ:UBFO) is even less popular than CMCL. Hedge funds dodged a bullet by taking a bearish stance towards UBFO. 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 UBFO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); UBFO investors were disappointed as the stock returned -7.1% 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.
