Is Southern First Bancshares, Inc. (SFST) Going to Burn These Hedge Funds?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Southern First Bancshares, Inc. (NASDAQ:SFST).

Hedge fund interest in Southern First Bancshares, Inc. (NASDAQ:SFST) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SFST isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare SFST to other stocks including Mereo BioPharma Group plc (NASDAQ:MREO), Transcat, Inc. (NASDAQ:TRNS), and Intelligent Systems Corporation (NYSE:INS) to get a better sense of its popularity.

To the average investor there are a large number of gauges market participants have at their disposal to grade their stock investments. Two of the most useful gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the S&P 500 by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Anton Schutz of Mendon Capital Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $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. With all of this in mind we’re going to go over the key hedge fund action encompassing Southern First Bancshares, Inc. (NASDAQ:SFST).

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

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SFST over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, EJF Capital held the most valuable stake in Southern First Bancshares, Inc. (NASDAQ:SFST), which was worth $6.4 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $6.2 million worth of shares. Mendon Capital Advisors, GAMCO Investors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Southern First Bancshares, Inc. (NASDAQ:SFST), around 0.46% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, setting aside 0.23 percent of its 13F equity portfolio to SFST.

Seeing as Southern First Bancshares, Inc. (NASDAQ:SFST) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies who were dropping their full holdings by the end of the first quarter. It’s worth mentioning that Fred Cummings’s Elizabeth Park Capital Management dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $3.4 million in stock. Phil Stone’s fund, Fourthstone LLC, also dropped its stock, about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Southern First Bancshares, Inc. (NASDAQ:SFST). These stocks are Mereo BioPharma Group plc (NASDAQ:MREO), Transcat, Inc. (NASDAQ:TRNS), Intelligent Systems Corporation (NYSE:INS), Civista Bancshares, Inc. (NASDAQ:CIVB), Marrone Bio Innovations Inc (NASDAQ:MBII), NL Industries, Inc. (NYSE:NL), and American National BankShares Inc (NASDAQ:AMNB). This group of stocks’ market valuations are closest to SFST’s market valuation.

View table here if you experience formatting issues.

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 $48 million. That figure was $14 million in SFST’s case. Mereo BioPharma Group plc (NASDAQ:MREO) is the most popular stock in this table. On the other hand NL Industries, Inc. (NYSE:NL) is the least popular one with only 3 bullish hedge fund positions. Southern First Bancshares, Inc. (NASDAQ:SFST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SFST is 38.2. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on SFST as the stock returned 14.6% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.

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