NewBridge Bancorp (NBBC): Hedge Funds Are Snapping Up

Does NewBridge Bancorp (NASDAQ:NBBC) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

NewBridge Bancorp has seen an increase in hedge fund interest during the third quarter. NBBC was in 10 hedge funds’ portfolios at the end of September, compared to 6 funds in our database with NBBC positions at the end of the previous quarter. It seems that these investors have been right on money, as the stock has advanced by 38% since the end of September. At the end of this article we will also compare NBBC to other stocks, including Neos Therapeutics Inc (NASDAQ:NEOS), Potbelly Corp (NASDAQ:PBPB), and Zogenix, Inc. (NASDAQ:ZGNX) to get a better sense of its popularity.

To most market participants, hedge funds are seen as unimportant, old investment vehicles of yesteryear. While there are over 8000 funds in operation at present, We look at the upper echelon of this group, around 700 funds. It is estimated that this group of investors administer the lion’s share of the smart money’s total asset base, and by observing their unrivaled equity investments, Insider Monkey has figured out numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s take a glance at the recent action encompassing NewBridge Bancorp (NASDAQ:NBBC).

How are hedge funds trading NewBridge Bancorp (NASDAQ:NBBC)?

At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 67% from a quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Matthew Lindenbaum’s Basswood Capital has the number one position in NewBridge Bancorp (NASDAQ:NBBC), worth close to $30.3 million, amounting to 1.5% of its total 13F portfolio. Coming in second is Endicott Management, managed by Robert I. Usdan and Wayne K. Goldstein, which holds a $21.4 million position; 7.9% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions consist of Anton Schutz’s Mendon Capital Advisors, Jim Simons’ Renaissance Technologies, and Israel Englander’s Millennium Management.

As aggregate interest increased, key money managers have jumped into NewBridge Bancorp (NASDAQ:NBBC) headfirst. Millennium Management initiated the most valuable position in NewBridge Bancorp (NASDAQ:NBBC). Millennium Management had $0.3 million invested in the company at the end of the quarter. Paul Magidson, Jonathan Cohen, and Ostrom Enders’ Castine Capital Management also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, and Joshua Nash’s Ulysses Management.

Let’s also examine hedge fund activity in other stocks similar to NewBridge Bancorp (NASDAQ:NBBC). We will take a look at Neos Therapeutics Inc (NASDAQ:NEOS), Potbelly Corp (NASDAQ:PBPB), Zogenix, Inc. (NASDAQ:ZGNX), and Comtech Telecomm. Corp. (NASDAQ:CMTL). All of these stocks’ market caps resemble NBBC’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $65 million in NBBC’s case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand Neos Therapeutics Inc (NASDAQ:NEOS) is the least popular one with only 9 bullish hedge fund positions. NewBridge Bancorp (NASDAQ:NBBC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ZGNX might be a better candidate to consider a long position.