“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Bancorp of New Jersey, Inc (NYSE:BKJ) and see how it was affected.
Is Bancorp of New Jersey, Inc (NYSE:BKJ) an excellent stock to buy now? Money managers are becoming hopeful. The number of bullish hedge fund bets advanced by 4 in recent months. Our calculations also showed that BKJ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BKJ was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 0 hedge funds in our database with BKJ 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.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to check out the fresh hedge fund action encompassing Bancorp of New Jersey, Inc (NYSE:BKJ).
How are hedge funds trading Bancorp of New Jersey, Inc (NYSE:BKJ)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in BKJ a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Tudor Investment Corp, managed by Paul Tudor Jones, holds the largest position in Bancorp of New Jersey, Inc (NYSE:BKJ). Tudor Investment Corp has a $6.2 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by David Alexander Witkin of Beryl Capital Management, with a $0.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Renaissance Technologies, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and . In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Bancorp of New Jersey, Inc (NYSE:BKJ), around 0.21% of its 13F portfolio. Beryl Capital Management is also relatively very bullish on the stock, designating 0.14 percent of its 13F equity portfolio to BKJ.
Now, specific money managers have been driving this bullishness. Tudor Investment Corp, managed by Paul Tudor Jones, created the most outsized position in Bancorp of New Jersey, Inc (NYSE:BKJ). Tudor Investment Corp had $6.2 million invested in the company at the end of the quarter. David Alexander Witkin’s Beryl Capital Management also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Bancorp of New Jersey, Inc (NYSE:BKJ). We will take a look at Sutter Rock Capital Corp. (NASDAQ:SSSS), TESSCO Technologies, Incorporated (NASDAQ:TESS), PRGX Global Inc (NASDAQ:PRGX), and StealthGas Inc. (NASDAQ:GASS). This group of stocks’ market caps are similar to BKJ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSSS | 8 | 6366 | 2 |
| TESS | 2 | 7032 | -2 |
| PRGX | 7 | 37549 | 0 |
| GASS | 5 | 45969 | -1 |
| Average | 5.5 | 24229 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $7 million in BKJ’s case. Sutter Rock Capital Corp. (NASDAQ:SSSS) is the most popular stock in this table. On the other hand TESSCO Technologies, Incorporated (NASDAQ:TESS) is the least popular one with only 2 bullish hedge fund positions. Bancorp of New Jersey, Inc (NYSE:BKJ) 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 BKJ as the stock returned 11.6% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.