Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Opus Bank (NASDAQ:OPB) a good stock to buy now? Investors who are in the know are actually becoming less hopeful. The number of long hedge fund investments experienced a decline of 3 recently. There were 10 hedge funds in our database with OPB holdings at the end of the 2016 third quarter. 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 Amplify Snack Brands Inc (NYSE:BETR), Sykes Enterprises, Incorporated (NASDAQ:SYKE), and Loral Space & Communications Ltd. (NASDAQ:LORL) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s check out the latest action encompassing Opus Bank (NASDAQ:OPB).
How are hedge funds trading Opus Bank (NASDAQ:OPB)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 23% from the second quarter of 2016. On the other hand, there were a total of 18 hedge funds with a bullish position in OPB at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Paul Singer’s Elliott Management has the number one position in Opus Bank (NASDAQ:OPB), worth close to $178.7 million, comprising 1.5% of its total 13F portfolio. Coming in second is David Abrams of Abrams Capital Management, with a $37.2 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Matthew Lindenbaum’s Basswood Capital, Fred Cummings’ Elizabeth Park Capital Management and William Black’s Consector Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dumped their positions entirely. Interestingly, Anton Schutz’s Mendon Capital Advisors dumped the biggest investment of all the hedgies studied by Insider Monkey, comprising an estimated $14.4 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund dumped about $0.7 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Opus Bank (NASDAQ:OPB) but similarly valued. These stocks are Amplify Snack Brands Inc (NYSE:BETR), Sykes Enterprises, Incorporated (NASDAQ:SYKE), Loral Space & Communications Ltd. (NASDAQ:LORL), and SPS Commerce, Inc. (NASDAQ:SPSC). This group of stocks’ market caps are closest to OPB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BETR | 5 | 13193 | -5 |
| SYKE | 16 | 62078 | -1 |
| LORL | 24 | 682723 | 1 |
| SPSC | 10 | 63081 | -5 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $205 million. That figure was $263 million in OPB’s case. Loral Space & Communications Ltd. (NASDAQ:LORL) is the most popular stock in this table. On the other hand Amplify Snack Brands Inc (NYSE:BETR) is the least popular one with only 5 bullish hedge fund positions. Opus Bank (NASDAQ:OPB) 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 LORL might be a better candidate to consider taking a long position in.
Disclosure: None
