Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Southern National Bancorp of Virginia, Inc (NASDAQ:SONA) based on that data and determine whether they were really smart about the stock.
Southern National Bancorp of Virginia, Inc (NASDAQ:SONA) has seen an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that SONA 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.
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the recent hedge fund action regarding Southern National Bancorp of Virginia, Inc (NASDAQ:SONA).
How have hedgies been trading Southern National Bancorp of Virginia, Inc (NASDAQ:SONA)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SONA over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Southern National Bancorp of Virginia, Inc (NASDAQ:SONA) was held by Renaissance Technologies, which reported holding $6.2 million worth of stock at the end of September. It was followed by Royce & Associates with a $2.8 million position. Other investors bullish on the company included Fourthstone LLC, Two Sigma Advisors, and Winton Capital Management. In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Southern National Bancorp of Virginia, Inc (NASDAQ:SONA), around 1.03% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to SONA.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Fourthstone LLC, managed by Phil Stone, established the largest position in Southern National Bancorp of Virginia, Inc (NASDAQ:SONA). Fourthstone LLC had $1.1 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.1 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Southern National Bancorp of Virginia, Inc (NASDAQ:SONA) but similarly valued. We will take a look at PCSB Financial Corporation (NASDAQ:PCSB), The Michaels Companies, Inc. (NASDAQ:MIK), HEXO Corp. (NYSE:HEXO), and Territorial Bancorp Inc (NASDAQ:TBNK). All of these stocks’ market caps are similar to SONA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PCSB | 10 | 18293 | -1 |
| MIK | 22 | 32826 | -4 |
| HEXO | 7 | 720 | 1 |
| TBNK | 4 | 20232 | 0 |
| Average | 10.75 | 18018 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $13 million in SONA’s case. The Michaels Companies, Inc. (NASDAQ:MIK) is the most popular stock in this table. On the other hand Territorial Bancorp Inc (NASDAQ:TBNK) is the least popular one with only 4 bullish hedge fund positions. Southern National Bancorp of Virginia, Inc (NASDAQ:SONA) 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately SONA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SONA investors were disappointed as the stock returned -0.5% 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.
