While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding QCR Holdings, Inc. (NASDAQ:QCRH).
Is QCR Holdings, Inc. (NASDAQ:QCRH) a worthy investment today? The best stock pickers are becoming hopeful. The number of bullish hedge fund positions rose by 1 recently. Our calculations also showed that QCRH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). QCRH was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. There were 8 hedge funds in our database with QCRH holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to review the latest hedge fund action surrounding QCR Holdings, Inc. (NASDAQ:QCRH).
How have hedgies been trading QCR Holdings, Inc. (NASDAQ:QCRH)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards QCRH over the last 17 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.
More specifically, Renaissance Technologies was the largest shareholder of QCR Holdings, Inc. (NASDAQ:QCRH), with a stake worth $20.9 million reported as of the end of September. Trailing Renaissance Technologies was Castine Capital Management, which amassed a stake valued at $16.5 million. Endicott Management, Elizabeth Park Capital Management, and D E Shaw 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 Endicott Management allocated the biggest weight to QCR Holdings, Inc. (NASDAQ:QCRH), around 14.7% of its 13F portfolio. Castine Capital Management is also relatively very bullish on the stock, setting aside 4.51 percent of its 13F equity portfolio to QCRH.
Consequently, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, created the largest position in QCR Holdings, Inc. (NASDAQ:QCRH). Winton Capital Management had $0.9 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.2 million position during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as QCR Holdings, Inc. (NASDAQ:QCRH) but similarly valued. These stocks are Cars.com Inc. (NYSE:CARS), SMART Global Holdings, Inc. (NASDAQ:SGH), Fiverr International Ltd. (NYSE:FVRR), and MuniVest Fund, Inc. (NYSE:MVF). This group of stocks’ market caps resemble QCRH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CARS | 31 | 171735 | 2 |
| SGH | 17 | 285893 | 7 |
| FVRR | 5 | 9126 | -4 |
| MVF | 1 | 586 | 0 |
| Average | 13.5 | 116835 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $64 million in QCRH’s case. Cars.com Inc. (NYSE:CARS) is the most popular stock in this table. On the other hand MuniVest Fund, Inc. (NYSE:MVF) is the least popular one with only 1 bullish hedge fund positions. QCR Holdings, Inc. (NASDAQ:QCRH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on QCRH, though not to the same extent, as the stock returned 10.1% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
