We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 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 The Bancorp, Inc. (NASDAQ:TBBK).
Is The Bancorp, Inc. (NASDAQ:TBBK) worth your attention right now? Money managers are betting on the stock. The number of long hedge fund positions advanced by 1 lately. Our calculations also showed that TBBK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). TBBK was in 18 hedge funds’ portfolios at the end of the third quarter of 2019. There were 17 hedge funds in our database with TBBK positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
Cliff Asness of AQR Capital Management
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 peek at the fresh hedge fund action surrounding The Bancorp, Inc. (NASDAQ:TBBK).
Hedge fund activity in The Bancorp, Inc. (NASDAQ:TBBK)
Heading into the fourth quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in TBBK a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the number one position in The Bancorp, Inc. (NASDAQ:TBBK). Nantahala Capital Management has a $26.9 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish fund manager is Second Curve Capital, managed by Tom Brown, which holds a $14.4 million position; 8.8% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish comprise Cliff Asness’s AQR Capital Management, Peter Schliemann’s Rutabaga Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to The Bancorp, Inc. (NASDAQ:TBBK), around 8.79% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, setting aside 2.98 percent of its 13F equity portfolio to TBBK.
As industrywide interest jumped, specific money managers have jumped into The Bancorp, Inc. (NASDAQ:TBBK) headfirst. Winton Capital Management, managed by David Harding, initiated the most valuable position in The Bancorp, Inc. (NASDAQ:TBBK). Winton Capital Management had $0.8 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to The Bancorp, Inc. (NASDAQ:TBBK). These stocks are The First of Long Island Corporation (NASDAQ:FLIC), Tufin Software Technologies Ltd. (NYSE:TUFN), Autolus Therapeutics plc (NASDAQ:AUTL), and Denbury Resources Inc. (NYSE:DNR). This group of stocks’ market valuations are closest to TBBK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLIC | 10 | 40054 | 1 |
| TUFN | 7 | 7950 | 1 |
| AUTL | 11 | 63408 | -2 |
| DNR | 11 | 19387 | 1 |
| Average | 9.75 | 32700 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $85 million in TBBK’s case. Autolus Therapeutics plc (NASDAQ:AUTL) is the most popular stock in this table. On the other hand Tufin Software Technologies Ltd. (NYSE:TUFN) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks The Bancorp, Inc. (NASDAQ:TBBK) is more popular among hedge funds. 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. Hedge funds were also right about betting on TBBK as the stock returned 12% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
