We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like OP Bancorp (NASDAQ:OPBK).
OP Bancorp (NASDAQ:OPBK) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of September. 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 The Eastern Company (NASDAQ:EML), PCTEL, Inc. (NASDAQ:PCTI), and Fulcrum Therapeutics, Inc. (NASDAQ:FULC) to gather more data points. Our calculations also showed that OPBK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most investors, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are greater than 8000 funds trading at present, Our researchers choose to focus on the masters of this group, approximately 750 funds. These hedge fund managers preside over most of all hedge funds’ total capital, and by keeping an eye on their inimitable picks, Insider Monkey has figured out several investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Matthew Lindenbaum of Basswood Capital
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 latest hedge fund action encompassing OP Bancorp (NASDAQ:OPBK).
How are hedge funds trading OP Bancorp (NASDAQ:OPBK)?
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 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OPBK over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, EJF Capital, managed by Emanuel J. Friedman, holds the biggest position in OP Bancorp (NASDAQ:OPBK). EJF Capital has a $8.4 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is Basswood Capital, led by Matthew Lindenbaum, holding a $7.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Israel Englander’s Millennium Management, Renaissance Technologies and . In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to OP Bancorp (NASDAQ:OPBK), around 1.14% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to OPBK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Royce & Associates. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as OP Bancorp (NASDAQ:OPBK) but similarly valued. These stocks are The Eastern Company (NASDAQ:EML), PCTEL, Inc. (NASDAQ:PCTI), Fulcrum Therapeutics, Inc. (NASDAQ:FULC), and Kura Sushi USA, Inc. (NASDAQ:KRUS). This group of stocks’ market valuations match OPBK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EML | 6 | 44010 | 0 |
| PCTI | 14 | 30470 | 7 |
| FULC | 7 | 16168 | 7 |
| KRUS | 4 | 14698 | 4 |
| Average | 7.75 | 26337 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $17 million in OPBK’s case. PCTEL, Inc. (NASDAQ:PCTI) is the most popular stock in this table. On the other hand Kura Sushi USA, Inc. (NASDAQ:KRUS) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks OP Bancorp (NASDAQ:OPBK) is even less popular than KRUS. Hedge funds dodged a bullet by taking a bearish stance towards OPBK. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OPBK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OPBK investors were disappointed as the stock returned 0.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.