Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Lakeland Bancorp, Inc. (NASDAQ:LBAI).
Lakeland Bancorp, Inc. (NASDAQ:LBAI) investors should pay attention to an increase in support from the world’s most elite money managers recently. LBAI was in 12 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with LBAI positions at the end of the previous quarter. Our calculations also showed that LBAI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Lindenbaum of Basswood Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the latest hedge fund action surrounding Lakeland Bancorp, Inc. (NASDAQ:LBAI).
How have hedgies been trading Lakeland Bancorp, Inc. (NASDAQ:LBAI)?
Heading into the fourth quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LBAI over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Lakeland Bancorp, Inc. (NASDAQ:LBAI), which was worth $15.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $4.9 million worth of shares. Basswood Capital, Citadel Investment Group, and Two Sigma Advisors were 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 Lucas Capital Management allocated the biggest weight to Lakeland Bancorp, Inc. (NASDAQ:LBAI), around 1.66% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to LBAI.
Consequently, key money managers have jumped into Lakeland Bancorp, Inc. (NASDAQ:LBAI) headfirst. Marshall Wace, managed by Paul Marshall and Ian Wace, established the largest position in Lakeland Bancorp, Inc. (NASDAQ:LBAI). Marshall Wace had $0.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Andre F. Perold’s HighVista Strategies.
Let’s also examine hedge fund activity in other stocks similar to Lakeland Bancorp, Inc. (NASDAQ:LBAI). These stocks are Benefitfocus Inc (NASDAQ:BNFT), Twist Bioscience Corporation (NASDAQ:TWST), ArcBest Corporation (NASDAQ:ARCB), and Vocera Communications Inc (NYSE:VCRA). This group of stocks’ market valuations are closest to LBAI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNFT | 14 | 30746 | -1 |
| TWST | 10 | 67289 | 1 |
| ARCB | 14 | 75592 | -2 |
| VCRA | 9 | 26901 | -5 |
| Average | 11.75 | 50132 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $35 million in LBAI’s case. Benefitfocus Inc (NASDAQ:BNFT) is the most popular stock in this table. On the other hand Vocera Communications Inc (NYSE:VCRA) is the least popular one with only 9 bullish hedge fund positions. Lakeland Bancorp, Inc. (NASDAQ:LBAI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on LBAI, though not to the same extent, as the stock returned 8.9% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
