With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was RBB Bancorp (NASDAQ:RBB).
RBB Bancorp (NASDAQ:RBB) has seen an increase in hedge fund sentiment recently. Our calculations also showed that RBB 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.
Why do we pay any attention at all to hedge fund sentiment? 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.
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 RBB Bancorp (NASDAQ:RBB).
How are hedge funds trading RBB Bancorp (NASDAQ:RBB)?
Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 80% from the second quarter of 2019. On the other hand, there were a total of 5 hedge funds with a bullish position in RBB a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Matthew Lindenbaum’s Basswood Capital has the largest position in RBB Bancorp (NASDAQ:RBB), worth close to $6.7 million, amounting to 0.5% of its total 13F portfolio. The second most bullish fund manager is Polaris Capital Management, led by Bernard Horn, holding a $2.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish comprise Ken Griffin’s Citadel Investment Group, Renaissance Technologies and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to RBB Bancorp (NASDAQ:RBB), around 0.49% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 0.13 percent of its 13F equity portfolio to RBB.
As one would reasonably expect, key money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, assembled the largest position in RBB Bancorp (NASDAQ:RBB). Winton Capital Management had $1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.6 million investment in the stock during the quarter. The other funds with brand new RBB positions are John Overdeck and David Siegel’s Two Sigma Advisors and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as RBB Bancorp (NASDAQ:RBB) but similarly valued. These stocks are American National BankShares Inc (NASDAQ:AMNB), Insteel Industries Inc (NASDAQ:IIIN), ChemoCentryx Inc (NASDAQ:CCXI), and Willdan Group, Inc. (NASDAQ:WLDN). This group of stocks’ market caps resemble RBB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMNB | 2 | 9232 | 0 |
| IIIN | 3 | 40438 | -3 |
| CCXI | 17 | 64755 | 0 |
| WLDN | 6 | 9610 | 1 |
| Average | 7 | 31009 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $14 million in RBB’s case. ChemoCentryx Inc (NASDAQ:CCXI) is the most popular stock in this table. On the other hand American National BankShares Inc (NASDAQ:AMNB) is the least popular one with only 2 bullish hedge fund positions. RBB Bancorp (NASDAQ:RBB) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately RBB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RBB were disappointed as the stock returned 2.2% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
