Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of TowneBank (NASDAQ:TOWN) based on that data.
TowneBank (NASDAQ:TOWN) has seen a decrease in hedge fund sentiment recently. Our calculations also showed that TOWN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are perceived as slow, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our researchers look at the crème de la crème of this group, around 850 funds. These money managers have their hands on the lion’s share of the hedge fund industry’s total capital, and by keeping track of their top investments, Insider Monkey has deciphered a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Mario Gabelli of GAMCO Investors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the recent hedge fund action encompassing TowneBank (NASDAQ:TOWN).
How have hedgies been trading TowneBank (NASDAQ:TOWN)?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in TOWN a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in TowneBank (NASDAQ:TOWN), worth close to $23.8 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions encompass Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Mario Gabelli’s GAMCO Investors. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to TowneBank (NASDAQ:TOWN), around 0.02% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.0024 percent of its 13F equity portfolio to TOWN.
Because TowneBank (NASDAQ:TOWN) has experienced a decline in interest from the smart money, it’s easy to see that there were a few money managers who sold off their full holdings last quarter. At the top of the heap, Israel Englander’s Millennium Management cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $15.2 million in stock. Richard Driehaus’s fund, Driehaus Capital, also cut its stock, about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to TowneBank (NASDAQ:TOWN). These stocks are Four Corners Property Trust, Inc. (NYSE:FCPT), Sogou Inc. (NYSE:SOGO), Cavco Industries, Inc. (NASDAQ:CVCO), and Edgewell Personal Care Company (NYSE:EPC). This group of stocks’ market values are similar to TOWN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FCPT | 14 | 53932 | -1 |
| SOGO | 6 | 9617 | -5 |
| CVCO | 20 | 122025 | 0 |
| EPC | 25 | 176671 | -1 |
| Average | 16.25 | 90561 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $25 million in TOWN’s case. Edgewell Personal Care Company (NYSE:EPC) is the most popular stock in this table. On the other hand Sogou Inc. (NYSE:SOGO) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks TowneBank (NASDAQ:TOWN) is even less popular than SOGO. Hedge funds dodged a bullet by taking a bearish stance towards TOWN. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately TOWN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); TOWN investors were disappointed as the stock returned 4.3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
