The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Metropolitan Bank Holding Corp. (NYSE:MCB).
Metropolitan Bank Holding Corp. (NYSE:MCB) was in 8 hedge funds’ portfolios at the end of September. MCB investors should be aware of an increase in enthusiasm from smart money lately. There were 6 hedge funds in our database with MCB holdings at the end of the previous quarter. Our calculations also showed that MCB 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. Let’s take a gander at the key hedge fund action regarding Metropolitan Bank Holding Corp. (NYSE:MCB).
What does smart money think about Metropolitan Bank Holding Corp. (NYSE:MCB)?
Heading into the fourth quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in MCB a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Endicott Management held the most valuable stake in Metropolitan Bank Holding Corp. (NYSE:MCB), which was worth $25.5 million at the end of the third quarter. On the second spot was EJF Capital which amassed $14.9 million worth of shares. Basswood Capital, Renaissance Technologies, 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 Endicott Management allocated the biggest weight to Metropolitan Bank Holding Corp. (NYSE:MCB), around 22.86% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, earmarking 2.04 percent of its 13F equity portfolio to MCB.
Consequently, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, created the most valuable position in Metropolitan Bank Holding Corp. (NYSE:MCB). Millennium Management had $0.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.2 million position during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Metropolitan Bank Holding Corp. (NYSE:MCB) but similarly valued. These stocks are Diana Shipping Inc. (NYSE:DSX), Kadmon Holdings, Inc. (NYSE:KDMN), Business First Bancshares, Inc. (NASDAQ:BFST), and Limoneira Company (NASDAQ:LMNR). This group of stocks’ market values match MCB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DSX | 9 | 25661 | 0 |
| KDMN | 15 | 144793 | 0 |
| BFST | 2 | 14267 | 1 |
| LMNR | 6 | 3407 | 4 |
| Average | 8 | 47032 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $57 million in MCB’s case. Kadmon Holdings, Inc. (NYSE:KDMN) is the most popular stock in this table. On the other hand Business First Bancshares, Inc. (NASDAQ:BFST) is the least popular one with only 2 bullish hedge fund positions. Metropolitan Bank Holding Corp. (NYSE:MCB) is not the least popular stock in this group but hedge fund interest is still below 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. A small number of hedge funds were also right about betting on MCB as the stock returned 14.6% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
