SB Financial Group, Inc. (SBFG): Are Hedge Funds Right About This Stock?

In this article we will check out the progression of hedge fund sentiment towards SB Financial Group, Inc. (NASDAQ:SBFG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

SB Financial Group, Inc. (NASDAQ:SBFG) investors should be aware of an increase in hedge fund sentiment lately. SB Financial Group, Inc. (NASDAQ:SBFG) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 4. Our calculations also showed that SBFG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Emanuel Friedman of EJF Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 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 we’re going to take a look at the recent hedge fund action encompassing SB Financial Group, Inc. (NASDAQ:SBFG).

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

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SBFG over the last 23 quarters. So, let’s check out 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, Emanuel J. Friedman’s EJF Capital has the biggest position in SB Financial Group, Inc. (NASDAQ:SBFG), worth close to $9.1 million, corresponding to 0.7% of its total 13F portfolio. The second largest stake is held by Jeffrey Gendell of Tontine Asset Management, with a $0.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to SB Financial Group, Inc. (NASDAQ:SBFG), around 0.66% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to SBFG.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Renaissance Technologies, created the largest position in SB Financial Group, Inc. (NASDAQ:SBFG). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks similar to SB Financial Group, Inc. (NASDAQ:SBFG). These stocks are Envela Corporation (NYSE:ELA), Hawthorn Bancshares, Inc. (NASDAQ:HWBK), Middlefield Banc Corp. (NASDAQ:MBCN), Vislink Technologies, Inc. (NASDAQ:VISL), Blueknight Energy Partners L.P. (NASDAQ:BKEP), Union Bankshares, Inc. (NASDAQ:UNB), and AEterna Zentaris Inc. (NASDAQ:AEZS). This group of stocks’ market values resemble SBFG’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $10 million in SBFG’s case. Envela Corporation (NYSE:ELA) is the most popular stock in this table. On the other hand Hawthorn Bancshares, Inc. (NASDAQ:HWBK) is the least popular one with only 2 bullish hedge fund positions. SB Financial Group, Inc. (NASDAQ:SBFG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SBFG is 53.5. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately SBFG wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SBFG investors were disappointed as the stock returned 6.7% since the end of March (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 in 2021.

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