Were Hedge Funds Right About Ditching Ameris Bancorp (ABCB)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAmeris Bancorp (NASDAQ:ABCB) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Ameris Bancorp (NASDAQ:ABCB) has seen a decrease in hedge fund sentiment lately. ABCB was in 13 hedge funds’ portfolios at the end of March. There were 16 hedge funds in our database with ABCB holdings at the end of the previous quarter. Our calculations also showed that ABCB 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.

In the 21st century investor’s toolkit there are a lot of indicators investors use to assess publicly traded companies. Some of the most under-the-radar indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a superb amount (see the details here).

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 biggest gold mining companies to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the recent hedge fund action encompassing Ameris Bancorp (NASDAQ:ABCB).

How have hedgies been trading Ameris Bancorp (NASDAQ:ABCB)?

Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in ABCB over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Polaris Capital Management, managed by Bernard Horn, holds the biggest position in Ameris Bancorp (NASDAQ:ABCB). Polaris Capital Management has a $26.6 million position in the stock, comprising 1.6% of its 13F portfolio. The second most bullish fund manager is Anton Schutz of Mendon Capital Advisors, with a $17.5 million position; 8.6% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish include Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management, Ira Unschuld’s Brant Point Investment Management and Mark Lee’s Forest Hill Capital. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Ameris Bancorp (NASDAQ:ABCB), around 8.62% of its 13F portfolio. Castine Capital Management is also relatively very bullish on the stock, dishing out 7.95 percent of its 13F equity portfolio to ABCB.

Seeing as Ameris Bancorp (NASDAQ:ABCB) has witnessed bearish sentiment from the smart money, it’s easy to see that there is a sect of money managers that elected to cut their positions entirely by the end of the first quarter. It’s worth mentioning that Emanuel J. Friedman’s EJF Capital dumped the biggest position of the 750 funds monitored by Insider Monkey, comprising close to $15.5 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $1.4 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Ameris Bancorp (NASDAQ:ABCB). These stocks are World Fuel Services Corporation (NYSE:INT), New Fortress Energy LLC (NASDAQ:NFE), SJW Corp. (NYSE:SJW), and YPF Sociedad Anonima (NYSE:YPF). This group of stocks’ market caps resemble ABCB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $78 million in ABCB’s case. World Fuel Services Corporation (NYSE:INT) is the most popular stock in this table. On the other hand New Fortress Energy LLC (NASDAQ:NFE) is the least popular one with only 2 bullish hedge fund positions. Ameris Bancorp (NASDAQ:ABCB) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately ABCB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ABCB were disappointed as the stock returned -0.5% during the same time period 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 many of these stocks already outperformed the market so far this year.

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