The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds’ top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 24.4% through September 30th, vs. a gain of 20.4% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards The Bancorp, Inc. (NASDAQ:TBBK), and what that likely means for the prospects of the company and its stock.
The Bancorp, Inc. (NASDAQ:TBBK) was in 17 hedge funds’ portfolios at the end of the second quarter of 2019. TBBK has seen an increase in activity from the world’s largest hedge funds in recent months. There were 16 hedge funds in our database with TBBK positions at the end of the previous quarter. Our calculations also showed that TBBK isn’t among the 30 most popular stocks among hedge funds (see the video below).
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the fresh hedge fund action regarding The Bancorp, Inc. (NASDAQ:TBBK).
What does smart money think about The Bancorp, Inc. (NASDAQ:TBBK)?
At Q2’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TBBK over the last 16 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the most valuable position in The Bancorp, Inc. (NASDAQ:TBBK). Nantahala Capital Management has a $24.2 million position in the stock, comprising 0.7% of its 13F portfolio. On Nantahala Capital Management’s heels is Second Curve Capital, managed by Tom Brown, which holds a $14.8 million position; the fund has 10.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Peter Schliemann’s Rutabaga Capital Management, D. E. Shaw’s D E Shaw and Renaissance Technologies.
As aggregate interest increased, key hedge funds have jumped into The Bancorp, Inc. (NASDAQ:TBBK) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in The Bancorp, Inc. (NASDAQ:TBBK). Arrowstreet Capital had $0.5 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new TBBK position is Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Bancorp, Inc. (NASDAQ:TBBK) but similarly valued. These stocks are CURO Group Holdings Corp. (NYSE:CURO), Meridian Bioscience, Inc. (NASDAQ:VIVO), Teekay Offshore Partners L.P. (NYSE:TOO), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks’ market caps match TBBK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CURO | 13 | 90202 | -4 |
| VIVO | 17 | 60699 | 1 |
| TOO | 6 | 2852 | -2 |
| ACLS | 14 | 60419 | -2 |
| Average | 12.5 | 53543 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $81 million in TBBK’s case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand Teekay Offshore Partners L.P. (NYSE:TOO) is the least popular one with only 6 bullish hedge fund positions. The Bancorp, Inc. (NASDAQ:TBBK) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on TBBK as the stock returned 11% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
