The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Community Bankers Trust Corp. (NASDAQ:ESXB) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Community Bankers Trust Corp. was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. 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 Houston Wire & Cable Company (NASDAQ:HWCC), Manning and Napier Inc (NYSE:MN), and CUI Global Inc (NASDAQ:CUI) to gather more data points.
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To most stock holders, hedge funds are viewed as underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our experts choose to focus on the leaders of this club, approximately 700 funds. These investment experts preside over the majority of all hedge funds’ total asset base, and by observing their first-class investments, Insider Monkey has discovered a few investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, we’re going to analyze the latest action encompassing Community Bankers Trust Corp. (NASDAQ:ESXB).
How are hedge funds trading Community Bankers Trust Corp. (NASDAQ:ESXB)?
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Emanuel J. Friedman’s EJF Capital has the most valuable position in Community Bankers Trust Corp. (NASDAQ:ESXB), worth close to $8.7 million, amounting to 0.4% of its total 13F portfolio. The second largest stake is held by Paul Magidson, Jonathan Cohen. And Ostrom Enders’ Castine Capital Management, with a $4.1 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Neil Chriss’ Hutchin Hill Capital, Israel Englander’s Millennium Management and Paul J. Isaac’s Arbiter Partners Capital Management.
There weren’t any hedge funds initiating brand new positions in the stock during the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Community Bankers Trust Corp. (NASDAQ:ESXB). We will take a look at Houston Wire & Cable Company (NASDAQ:HWCC), Manning and Napier Inc (NYSE:MN), CUI Global Inc (NASDAQ:CUI), and pSivida Corp. (NASDAQ:PSDV). This group of stocks’ market values are closest to ESXB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HWCC | 9 | 28259 | -1 |
| MN | 11 | 27896 | -3 |
| CUI | 6 | 22546 | -1 |
| PSDV | 8 | 13452 | 1 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $23 million, compared to $14 million in ESXB’s case. Manning and Napier Inc (NYSE:MN) is the most popular stock in this table, while CUI Global Inc (NASDAQ:CUI) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Community Bankers Trust Corp. (NASDAQ:ESXB) is even less popular than CUI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.