MidWestOne Financial Group, Inc. (MOFG): Hedge Fund Sentiment Unchanged

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards MidWestOne Financial Group, Inc. (NASDAQ:MOFG).

MidWestOne Financial Group, Inc. (NASDAQ:MOFG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of March. Our calculations also showed that MOFG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Business First Bancshares, Inc. (NASDAQ:BFST), Accelerate Diagnostics Inc (NASDAQ:AXDX), and Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) to gather more data points.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce of Royce & Associates

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. Keeping this in mind we’re going to analyze the latest hedge fund action encompassing MidWestOne Financial Group, Inc. (NASDAQ:MOFG).

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

Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in MOFG a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Royce & Associates was the largest shareholder of MidWestOne Financial Group, Inc. (NASDAQ:MOFG), with a stake worth $4.8 million reported as of the end of March. Trailing Royce & Associates was Citadel Investment Group, which amassed a stake valued at $1.4 million. Renaissance Technologies, Millennium Management, and Two Sigma Advisors 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 Royce & Associates allocated the biggest weight to MidWestOne Financial Group, Inc. (NASDAQ:MOFG), around 0.03% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0016 percent of its 13F equity portfolio to MOFG.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. 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 Millennium Management).

Let’s also examine hedge fund activity in other stocks similar to MidWestOne Financial Group, Inc. (NASDAQ:MOFG). These stocks are Business First Bancshares, Inc. (NASDAQ:BFST), Accelerate Diagnostics Inc (NASDAQ:AXDX), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), 22nd Century Group, Inc (NYSE:XXII), Preferred Apartment Communities Inc. (NYSE:APTS), Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), and AXT Inc (NASDAQ:AXTI). This group of stocks’ market values match MOFG’s market value.

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As you can see these stocks had an average of 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $9 million in MOFG’s case. Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) is the most popular stock in this table. On the other hand Business First Bancshares, Inc. (NASDAQ:BFST) is the least popular one with only 3 bullish hedge fund positions. MidWestOne Financial Group, Inc. (NASDAQ:MOFG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MOFG is 36.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 4.8 percentage points. Unfortunately MOFG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MOFG investors were disappointed as the stock returned -2.7% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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