Is MPB Stock A Buy?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Mid Penn Bancorp (NASDAQ:MPB).

Is MPB stock a buy? Hedge funds were in a bullish mood. The number of bullish hedge fund bets went up by 2 recently. Mid Penn Bancorp (NASDAQ:MPB) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MPB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to review the latest hedge fund action surrounding Mid Penn Bancorp (NASDAQ:MPB).

Do Hedge Funds Think MPB Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the fourth quarter of 2020. By comparison, 4 hedge funds held shares or bullish call options in MPB a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Tontine Asset Management, managed by Jeffrey Gendell, holds the number one position in Mid Penn Bancorp (NASDAQ:MPB). Tontine Asset Management has a $2.4 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Minerva Advisors, led by David P. Cohen, holding a $1 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism include Renaissance Technologies, Phil Stone’s Fourthstone LLC and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Mid Penn Bancorp (NASDAQ:MPB), around 0.57% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 0.26 percent of its 13F equity portfolio to MPB.

Now, key money managers have jumped into Mid Penn Bancorp (NASDAQ:MPB) headfirst. Renaissance Technologies, initiated the most outsized position in Mid Penn Bancorp (NASDAQ:MPB). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter. Phil Stone’s Fourthstone LLC also made a $0.3 million investment in the stock during the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mid Penn Bancorp (NASDAQ:MPB) but similarly valued. These stocks are Genasys Inc. (NASDAQ:GNSS), LSI Industries, Inc. (NASDAQ:LYTS), Irsa Inversiones y Rprsntcins SA (NYSE:IRS), Red Violet, Inc. (NASDAQ:RDVT), Larimar Therapeutics, Inc. (NASDAQ:LRMR), Vista Oil & Gas, S.A.B. de C.V. (NYSE:VIST), and Citius Pharmaceuticals, Inc. (NASDAQ:CTXR). This group of stocks’ market valuations match MPB’s market valuation.

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As you can see these stocks had an average of 8.4 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $4 million in MPB’s case. Larimar Therapeutics, Inc. (NASDAQ:LRMR) is the most popular stock in this table. On the other hand Irsa Inversiones y Rprsntcins SA (NYSE:IRS) is the least popular one with only 3 bullish hedge fund positions. Mid Penn Bancorp (NASDAQ:MPB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MPB is 39.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on MPB, though not to the same extent, as the stock returned 8.1% since the end of Q1 (through June 11th) and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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