The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards BNC Bancorp (NASDAQ:BNCN).
BNC Bancorp (NASDAQ:BNCN) was in 14 hedge funds’ portfolios at the end of September. BNCN investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. There were 15 hedge funds in our database with BNCN holdings at the end of June. 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 Osisko Gold Royalties Ltd (NYSE:OR), Union First Market Bankshares Corp. (NASDAQ:UBSH), and Abaxis Inc (NASDAQ:ABAX) to gather more data points.
Follow Bnc Bancorp (NASDAQ:BNCN)
Follow Bnc Bancorp (NASDAQ:BNCN)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Fer Gregory/Shutterstock.com
What have hedge funds been doing with BNC Bancorp (NASDAQ:BNCN)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 7% drop from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in BNCN at the beginning of this year, with hedge fund ownership being flat in 2016. So, let’s check 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, led by Bernard Horn, holds the number one position in BNC Bancorp (NASDAQ:BNCN). Polaris Capital Management has a $10.1 million position in the stock. The second most bullish fund manager is Forest Hill Capital, led by Mark Lee, holding an $8.8 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions consist of Fred Cummings’ Elizabeth Park Capital Management, Neil Chriss’ Hutchin Hill Capital, and Emanuel J. Friedman’s EJF Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
Because BNC Bancorp (NASDAQ:BNCN) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there were a few fund managers that decided to sell off their positions entirely by the end of the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group cashed in the largest position of all the hedgies monitored by Insider Monkey, worth close to $0.3 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also said goodbye to its small position in the stock.
Let’s check out hedge fund activity in other stocks similar to BNC Bancorp (NASDAQ:BNCN). We will take a look at Osisko Gold Royalties Ltd (NYSE:OR), Union First Market Bankshares Corp. (NASDAQ:UBSH), Abaxis Inc (NASDAQ:ABAX), and Coherus Biosciences Inc (NASDAQ:CHRS). This group of stocks’ market values match BNCN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OR | 5 | 13875 | 5 |
| UBSH | 13 | 40675 | -1 |
| ABAX | 8 | 26481 | -2 |
| CHRS | 19 | 120944 | 5 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $58 million in BNCN’s case. Coherus Biosciences Inc (NASDAQ:CHRS) is the most popular stock in this table. On the other hand Osisko Gold Royalties Ltd (NYSE:OR) is the least popular one with only 5 bullish hedge fund positions. BNC Bancorp (NASDAQ:BNCN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CHRS might be a better candidate to consider taking a long position in.
Disclosure: None
