Where Do Hedge Funds Stand On Timberland Bancorp, Inc. (TSBK)?

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 Timberland Bancorp, Inc. (NASDAQ:TSBK) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Hedge fund interest in Timberland Bancorp, Inc. (NASDAQ:TSBK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TSBK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TSBK to other stocks including Oxford Square Capital Corp. (NASDAQ:OXSQ), MDC Partners Inc. (NASDAQ:MDCA), and SC Health Corporation (NYSE:SCPE) to get a better sense of its popularity.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $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. Keeping this in mind let’s review the latest hedge fund action regarding Timberland Bancorp, Inc. (NASDAQ:TSBK).

Do Hedge Funds Think TSBK Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in TSBK a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in Timberland Bancorp, Inc. (NASDAQ:TSBK), which was worth $16.2 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $10.4 million worth of shares. Basswood Capital, Fourthstone LLC, and Bailard Inc 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 Fourthstone LLC allocated the biggest weight to Timberland Bancorp, Inc. (NASDAQ:TSBK), around 0.2% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 0.15 percent of its 13F equity portfolio to TSBK.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Zebra 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 Arrowstreet Capital).

Let’s now review hedge fund activity in other stocks similar to Timberland Bancorp, Inc. (NASDAQ:TSBK). We will take a look at Oxford Square Capital Corp. (NASDAQ:OXSQ), MDC Partners Inc. (NASDAQ:MDCA), SC Health Corporation (NYSE:SCPE), Sanara MedTech Inc. (NASDAQ:SMTI), Ring Energy Inc (NYSE:REI), Unity Bancorp, Inc. (NASDAQ:UNTY), and Gaia, Inc. (NASDAQ:GAIA). This group of stocks’ market caps match TSBK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.4 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $31 million in TSBK’s case. SC Health Corporation (NYSE:SCPE) is the most popular stock in this table. On the other hand Unity Bancorp, Inc. (NASDAQ:UNTY) is the least popular one with only 4 bullish hedge fund positions. Timberland Bancorp, Inc. (NASDAQ:TSBK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TSBK is 42.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately TSBK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TSBK investors were disappointed as the stock returned 4.8% since the end of March (through 6/25) 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 in 2021.

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

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