Southern National Banc. of Virginia, Inc (SONA): Are Hedge Funds Right About This Stock?

The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Southern National Banc. of Virginia, Inc (NASDAQ:SONA) from the perspective of those successful funds.

Southern National Banc. of Virginia, Inc (NASDAQ:SONA) investors should pay attention to an increase in support from the world’s most successful money managers in recent months. SONA was in 6 hedge funds’ portfolios at the end of September. There were 4 hedge funds in our database with SONA holdings at the end of the previous 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 Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH), Cidara Therapeutics Inc (NASDAQ:CDTX), and Enzymotec Ltd (NASDAQ:ENZY) 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, we’re going to review the fresh action encompassing Southern National Banc. of Virginia, Inc (NASDAQ:SONA).

How are hedge funds trading Southern National Banc. of Virginia, Inc (NASDAQ:SONA)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SONA over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Hutchin Hill Capital, led by Neil Chriss, holds the largest position in Southern National Banc. of Virginia, Inc (NASDAQ:SONA). According to regulatory filings, the fund has a $3.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Hutchin Hill Capital’s heels is Royce & Associates, led by Chuck Royce, which holds a $2.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Anton Schutz’s Mendon Capital Advisors, Renaissance Technologies, one of the largest hedge funds in the world, and Jeffrey Bronchick’s Cove Street 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.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Southern National Banc. of Virginia, Inc (NASDAQ:SONA) headfirst. Cove Street Capital assembled the largest position in Southern National Banc. of Virginia, Inc (NASDAQ:SONA). According to its latest 13F filing, the fund had $0.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium 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 Southern National Banc. of Virginia, Inc (NASDAQ:SONA) but similarly valued. We will take a look at Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH), Cidara Therapeutics Inc (NASDAQ:CDTX), Enzymotec Ltd (NASDAQ:ENZY), and GigOptix Inc (NYSEAMEX:GIG). This group of stocks’ market caps resemble SONA’s market cap.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $8 million in SONA’s case. Cidara Therapeutics Inc (NASDAQ:CDTX) is the most popular stock in this table. On the other hand Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH) is the least popular one with only 4 bullish hedge fund positions. Southern National Banc. of Virginia, Inc (NASDAQ:SONA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CDTX might be a better candidate to consider taking a long position in.

Disclosure: none.