The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Preferred Bank (NASDAQ:PFBC).
Is PFBC a good stock to buy now? Preferred Bank (NASDAQ:PFBC) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 13. PFBC has experienced an increase in support from the world’s most elite money managers of late. There were 9 hedge funds in our database with PFBC positions at the end of the second quarter. Our calculations also showed that PFBC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are numerous methods stock traders employ to value their holdings. Some of the most useful methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outperform their index-focused peers by a very impressive margin (see the details here).
Matthew Lindenbaum of Basswood Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to review the key hedge fund action surrounding Preferred Bank (NASDAQ:PFBC).
Do Hedge Funds Think PFBC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PFBC over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Preferred Bank (NASDAQ:PFBC) was held by Renaissance Technologies, which reported holding $10.4 million worth of stock at the end of September. It was followed by Basswood Capital with a $5.4 million position. Other investors bullish on the company included Arrowstreet Capital, Royce & Associates, and AQR Capital Management. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to Preferred Bank (NASDAQ:PFBC), around 0.45% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to PFBC.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, established the most outsized position in Preferred Bank (NASDAQ:PFBC). Tudor Investment Corp had $0.3 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Preferred Bank (NASDAQ:PFBC) but similarly valued. These stocks are Ocular Therapeutix Inc (NASDAQ:OCUL), Allegiance Bancshares, Inc. (NASDAQ:ABTX), AVROBIO, Inc. (NASDAQ:AVRO), Golden Star Resources Ltd. (NYSE:GSS), Myers Industries, Inc. (NYSE:MYE), Shoe Carnival, Inc. (NASDAQ:SCVL), and Dynavax Technologies Corporation (NASDAQ:DVAX). This group of stocks’ market values resemble PFBC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OCUL | 12 | 105293 | 1 |
| ABTX | 4 | 4232 | -1 |
| AVRO | 17 | 121702 | 0 |
| GSS | 6 | 23434 | -2 |
| MYE | 12 | 80684 | 1 |
| SCVL | 19 | 49764 | 8 |
| DVAX | 23 | 58102 | 6 |
| Average | 13.3 | 63316 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $20 million in PFBC’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand Allegiance Bancshares, Inc. (NASDAQ:ABTX) is the least popular one with only 4 bullish hedge fund positions. Preferred Bank (NASDAQ:PFBC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PFBC is 44.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on PFBC as the stock returned 37.3% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Follow Preferred Bank (NASDAQ:PFBC)
Follow Preferred Bank (NASDAQ:PFBC)
Disclosure: None. This article was originally published at Insider Monkey.
