Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Independent Bank Corporation(MI) (NASDAQ:IBCP) was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. IBCP has experienced an increase in hedge fund interest recently. There were 9 hedge funds in our database with IBCP holdings 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 Clearside Biomedical Inc (NASDAQ:CLSD), Southwest Bancorp, Inc. (NASDAQ:OKSB), and Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Independent Bank Corporation(MI) (NASDAQ:IBCP)
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 11% from one quarter earlier. Below, you can check out the change in bullish hedge fund positions in IBCP over the last 5 quarters, which collapsed by nearly 50% before rebounding over the past 2 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Emanuel J. Friedman of EJF Capital holds the largest position in Independent Bank Corporation(MI) (NASDAQ:IBCP). EJF Capital has a $24.4 million position in the stock, comprising 2% of its 13F portfolio. The second most bullish fund manager is Matthew Lindenbaum of Basswood Capital which holds a $17.5 million position. Some other hedge funds and institutional investors with similar optimism comprise Renaissance Technologies, one of the largest hedge funds in the world, Israel Englander’s Millennium Management, and Cliff Asness’ AQR Capital Management. 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-microcap stocks.
As industry-wide interest jumped, key hedge funds have jumped into Independent Bank Corporation(MI) (NASDAQ:IBCP) headfirst. Dmitry Balyasny’s Balyasny Asset Management assembled the most outsized position in Independent Bank Corporation(MI) (NASDAQ:IBCP). Balyasny Asset Management had $0.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.2 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Independent Bank Corporation(MI) (NASDAQ:IBCP). We will take a look at Clearside Biomedical Inc (NASDAQ:CLSD), Southwest Bancorp, Inc. (NASDAQ:OKSB), Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT), and Pier 1 Imports, Inc. (NYSE:PIR). This group of stocks’ market valuations resemble IBCP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLSD | 5 | 79949 | -3 |
| OKSB | 7 | 23417 | 2 |
| PFLT | 6 | 10058 | 1 |
| PIR | 18 | 77201 | -4 |
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 $48 million. That figure was $58 million in IBCP’s case. Pier 1 Imports, Inc. (NYSE:PIR) is the most popular stock in this table. On the other hand Clearside Biomedical Inc (NASDAQ:CLSD) is the least popular one with only 5 bullish hedge fund positions. Independent Bank Corporation(MI) (NASDAQ:IBCP) 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 PIR might be a better candidate to consider taking a long position in.
Disclosure: None
