We are still in an overall bull market and many stocks that smart money investors were piling into surged through November 22nd. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 52% and 49% respectively. Hedge funds’ top 3 stock picks returned 39.1% this year and beat the S&P 500 ETFs by nearly 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like MSB Financial Corp. (NASDAQ:MSBF).
Hedge fund interest in MSB Financial Corp. (NASDAQ:MSBF) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare MSBF to other stocks including Jerash Holdings (US), Inc. (NASDAQ:JRSH), J. Jill, Inc. (NYSE:JILL), and Destination XL Group Inc (NASDAQ:DXLG) to get a better sense of its popularity.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Price of MFP Investors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the latest hedge fund action encompassing MSB Financial Corp. (NASDAQ:MSBF).
How are hedge funds trading MSB Financial Corp. (NASDAQ:MSBF)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MSBF 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.
When looking at the institutional investors followed by Insider Monkey, Seidman Investment Partnership, managed by Lawrence Seidman, holds the number one position in MSB Financial Corp. (NASDAQ:MSBF). Seidman Investment Partnership has a $9.3 million position in the stock, comprising 8.5% of its 13F portfolio. The second most bullish fund manager is Michael Price of MFP Investors, with a $2.8 million position; 0.4% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to MSB Financial Corp. (NASDAQ:MSBF), around 8.45% of its portfolio. MFP Investors is also relatively very bullish on the stock, dishing out 0.39 percent of its 13F equity portfolio to MSBF.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks similar to MSB Financial Corp. (NASDAQ:MSBF). We will take a look at Jerash Holdings (US), Inc. (NASDAQ:JRSH), J. Jill, Inc. (NYSE:JILL), Destination XL Group Inc (NASDAQ:DXLG), and VBI Vaccines, Inc. (NASDAQ:VBIV). This group of stocks’ market valuations match MSBF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JRSH | 3 | 1469 | 2 |
| JILL | 6 | 2206 | -2 |
| DXLG | 6 | 31087 | -1 |
| VBIV | 9 | 48310 | 6 |
| Average | 6 | 20768 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $14 million in MSBF’s case. VBI Vaccines, Inc. (NASDAQ:VBIV) is the most popular stock in this table. On the other hand Jerash Holdings (US), Inc. (NASDAQ:JRSH) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks MSB Financial Corp. (NASDAQ:MSBF) is even less popular than JRSH. Hedge funds dodged a bullet by taking a bearish stance towards MSBF. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately MSBF wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MSBF investors were disappointed as the stock returned -7.3% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.