Investors Keeping Their Money Away From Lakeland Bancorp, Inc. (LBAI)

Concerns over a shift in the Fed’s easy monetary policy hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, the Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25 and October 30. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in small-cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the even more extreme correction in the Russell 2000. In this article, we will take a closer look at how hedge funds traded Lakeland Bancorp, Inc. (NASDAQ:LBAI) during the turbulent quarter.

Lakeland Bancorp, Inc. (NASDAQ:LBAI) investors should pay attention to an increase in hedge fund sentiment in recent months. Lakeland Bancorp, Inc. was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 9 hedge funds in our database with Lakeland Bancorp, Inc. positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Eldorado Resorts Inc (NASDAQ:ERI), Green Plains Partners LP (NASDAQ:GPP), and Overstock.com, Inc. (NASDAQ:OSTK) to gather more data points.

If you’d ask most market participants, hedge funds are assumed to be underperforming, old investment vehicles of years past. While there are greater than 8,000 funds trading at the moment, our experts look at the moguls of this club, about 700 funds. Most estimates calculate that this group of people command the majority of the hedge fund industry’s total asset base, and by observing their highest performing investments, Insider Monkey has determined various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s review the recent action regarding Lakeland Bancorp, Inc. (NASDAQ:LBAI).

What have hedge funds been doing with Lakeland Bancorp, Inc. (NASDAQ:LBAI)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 11% gain from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, holds the number one position in Lakeland Bancorp, Inc. (NASDAQ:LBAI). Bryn Mawr Capital has a $6.8 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is Basswood Capital, managed by Matthew Lindenbaum, which holds a $2.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Jim Simons’ Renaissance Technologies, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.

Consequently, specific money managers were breaking ground themselves. Citadel Investment Group created the largest position in Lakeland Bancorp, Inc. (NASDAQ:LBAI). Citadel Investment Group had $0.4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.1 million investment in the stock during the quarter.

Let’s go over hedge fund activity in other stocks similar to Lakeland Bancorp, Inc. (NASDAQ:LBAI). These stocks are Eldorado Resorts Inc (NASDAQ:ERI), Green Plains Partners LP (NASDAQ:GPP), Overstock.com, Inc. (NASDAQ:OSTK), and Inovio Pharmaceuticals Inc (NASDAQ:INO). This group of stocks’ market caps resemble Lakeland Bancorp, Inc.’s market cap.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $13 million in Lakeland Bancorp, Inc.’s case. Overstock.com, Inc. (NASDAQ:OSTK) is the most popular stock in this table. On the other hand Green Plains Partners LP (NASDAQ:GPP) is the least popular one with only 7 bullish hedge fund positions. Lakeland Bancorp, Inc. (NASDAQ:LBAI) is not the least popular stock in this group but hedge fund interest is still below average as is the amount of money invested in the stock. This is a negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Overstock.com, Inc. might be a better candidate to consider a long position in.