In this article we will take a look at whether hedge funds think Howard Bancorp Inc (NASDAQ:HBMD) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Howard Bancorp Inc (NASDAQ:HBMD) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that HBMD 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.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
Fred Cummings of Elizabeth Park Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the key hedge fund action regarding Howard Bancorp Inc (NASDAQ:HBMD).
How are hedge funds trading Howard Bancorp Inc (NASDAQ:HBMD)?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the fourth quarter of 2019. By comparison, 2 hedge funds held shares or bullish call options in HBMD a year ago. 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, Mendon Capital Advisors, managed by Anton Schutz, holds the number one position in Howard Bancorp Inc (NASDAQ:HBMD). Mendon Capital Advisors has a $5.9 million position in the stock, comprising 2.9% of its 13F portfolio. Sitting at the No. 2 spot is Elizabeth Park Capital Management, led by Fred Cummings, holding a $3.1 million position; 2.3% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism encompass Chuck Royce’s Royce & Associates, Renaissance Technologies and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Howard Bancorp Inc (NASDAQ:HBMD), around 2.91% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, earmarking 2.33 percent of its 13F equity portfolio to HBMD.
Consequently, key money managers were leading the bulls’ herd. Royce & Associates, managed by Chuck Royce, assembled the biggest position in Howard Bancorp Inc (NASDAQ:HBMD). Royce & Associates had $1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Phil Stone’s Fourthstone LLC.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Howard Bancorp Inc (NASDAQ:HBMD) but similarly valued. These stocks are Tarena International Inc (NASDAQ:TEDU), OptiNose, Inc. (NASDAQ:OPTN), Telenav Inc (NASDAQ:TNAV), and Rafael Holdings, Inc. (NYSE:RFL). This group of stocks’ market valuations resemble HBMD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEDU | 2 | 3437 | 0 |
| OPTN | 11 | 16969 | -5 |
| TNAV | 13 | 46283 | 0 |
| RFL | 5 | 23762 | -2 |
| Average | 7.75 | 22613 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $11 million in HBMD’s case. Telenav Inc (NASDAQ:TNAV) is the most popular stock in this table. On the other hand Tarena International Inc (NASDAQ:TEDU) is the least popular one with only 2 bullish hedge fund positions. Howard Bancorp Inc (NASDAQ:HBMD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately HBMD wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HBMD investors were disappointed as the stock returned -0.8% during the second quarter 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
