We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Ameris Bancorp (NASDAQ:ABCB).
Is Ameris Bancorp (NASDAQ:ABCB) a sound investment now? The smart money is taking a pessimistic view. The number of long hedge fund bets retreated by 2 recently. Our calculations also showed that ABCB 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.
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. Let’s take a peek at the new hedge fund action surrounding Ameris Bancorp (NASDAQ:ABCB).
What does smart money think about Ameris Bancorp (NASDAQ:ABCB)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in ABCB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Polaris Capital Management, managed by Bernard Horn, holds the largest position in Ameris Bancorp (NASDAQ:ABCB). Polaris Capital Management has a $43.7 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Mendon Capital Advisors, led by Anton Schutz, holding a $41.9 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions encompass Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management, Ira Unschuld’s Brant Point Investment Management and Gregg Moskowitz’s Interval Partners. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Ameris Bancorp (NASDAQ:ABCB), around 7.07% of its 13F portfolio. Castine Capital Management is also relatively very bullish on the stock, earmarking 6.15 percent of its 13F equity portfolio to ABCB.
Judging by the fact that Ameris Bancorp (NASDAQ:ABCB) has experienced a decline in interest from the smart money, it’s easy to see that there exists a select few hedge funds who sold off their full holdings in the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $5.6 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund dumped about $4.8 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ameris Bancorp (NASDAQ:ABCB) but similarly valued. These stocks are EnerSys (NYSE:ENS), American Assets Trust, Inc (NYSE:AAT), Quaker Chemical Corp (NYSE:KWR), and Navistar International Corp (NYSE:NAV). This group of stocks’ market caps resemble ABCB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENS | 17 | 90798 | 1 |
| AAT | 11 | 36996 | -4 |
| KWR | 18 | 154202 | 5 |
| NAV | 23 | 1132856 | -3 |
| Average | 17.25 | 353713 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $144 million in ABCB’s case. Navistar International Corp (NYSE:NAV) is the most popular stock in this table. On the other hand American Assets Trust, Inc (NYSE:AAT) is the least popular one with only 11 bullish hedge fund positions. Ameris Bancorp (NASDAQ:ABCB) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on ABCB, though not to the same extent, as the stock returned 8.5% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
