At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Professional Holding Corp. (NASDAQ:PFHD) makes for a good investment right now.
Professional Holding Corp. (NASDAQ:PFHD) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. Professional Holding Corp. (NASDAQ:PFHD) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. Our calculations also showed that PFHD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $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 let’s view the latest hedge fund action encompassing Professional Holding Corp. (NASDAQ:PFHD).
Do Hedge Funds Think PFHD Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PFHD 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 Professional Holding Corp. (NASDAQ:PFHD), which was worth $19.8 million at the end of the fourth quarter. On the second spot was Fourthstone LLC which amassed $0.7 million worth of shares. Mendon Capital Advisors was 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 Professional Holding Corp. (NASDAQ:PFHD), around 1.43% of its 13F portfolio. Fourthstone LLC is also relatively very bullish on the stock, designating 0.37 percent of its 13F equity portfolio to PFHD.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Professional Holding Corp. (NASDAQ:PFHD) headfirst. Fourthstone LLC, managed by Phil Stone, assembled the most outsized position in Professional Holding Corp. (NASDAQ:PFHD). Fourthstone LLC had $0.7 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks similar to Professional Holding Corp. (NASDAQ:PFHD). We will take a look at Hamilton Beach Brands Holding Company (NYSE:HBB), Safe Bulkers, Inc. (NYSE:SB), Great Ajax Corp (NYSE:AJX), Mogo Inc. (NASDAQ:MOGO), EMX Royalty Corporation (NYSE:EMX), Iterum Therapeutics plc (NASDAQ:ITRM), and Stellus Capital Investment Corporation (NYSE:SCM). This group of stocks’ market valuations match PFHD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HBB | 8 | 10151 | 2 |
| SB | 8 | 16324 | 3 |
| AJX | 11 | 9712 | 3 |
| MOGO | 8 | 29653 | 4 |
| EMX | 4 | 10849 | 0 |
| ITRM | 4 | 2748 | 1 |
| SCM | 3 | 3649 | -1 |
| Average | 6.6 | 11869 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $21 million in PFHD’s case. Great Ajax Corp (NYSE:AJX) is the most popular stock in this table. On the other hand Stellus Capital Investment Corporation (NYSE:SCM) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Professional Holding Corp. (NASDAQ:PFHD) is even less popular than SCM. Our overall hedge fund sentiment score for PFHD is 24. 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. Hedge funds dodged a bullet by taking a bearish stance towards PFHD. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately PFHD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); PFHD investors were disappointed as the stock returned -1.7% since the end of the first quarter (through 6/11) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
