Where Do Hedge Funds Stand On German American Bancorp., Inc. (GABC)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider German American Bancorp., Inc. (NASDAQ:GABC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

German American Bancorp., Inc. (NASDAQ:GABC) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that GABC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Employers Holdings, Inc. (NYSE:EIG), Shattuck Labs, Inc. (NASDAQ:STTK), and Cambium Networks Corporation (NASDAQ:CMBM) to gather more data points.

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.

Chuck Royce of Royce & Associates

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. With all of this in mind let’s take a gander at the recent hedge fund action encompassing German American Bancorp., Inc. (NASDAQ:GABC).

Do Hedge Funds Think GABC 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 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in GABC over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

The largest stake in German American Bancorp., Inc. (NASDAQ:GABC) was held by Royce & Associates, which reported holding $12.8 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $7.9 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Winton Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).

Let’s now take a look at hedge fund activity in other stocks similar to German American Bancorp., Inc. (NASDAQ:GABC). We will take a look at Employers Holdings, Inc. (NYSE:EIG), Shattuck Labs, Inc. (NASDAQ:STTK), Cambium Networks Corporation (NASDAQ:CMBM), National Bank Holdings Corp (NYSE:NBHC), Alexander & Baldwin Inc (NYSE:ALEX), PC Connection, Inc. (NASDAQ:CNXN), and NextGen Healthcare, Inc. (NASDAQ:NXGN). This group of stocks’ market caps are closest to GABC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $21 million in GABC’s case. Alexander & Baldwin Inc (NYSE:ALEX) is the most popular stock in this table. On the other hand PC Connection, Inc. (NASDAQ:CNXN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks German American Bancorp., Inc. (NASDAQ:GABC) is even less popular than CNXN. Our overall hedge fund sentiment score for GABC is 17.9. 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. Hedge funds dodged a bullet by taking a bearish stance towards GABC. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market again by 3.3 percentage points. Unfortunately GABC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); GABC investors were disappointed as the stock returned -14.1% since the end of the first quarter (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 since 2019.

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