Adage Capital Loads More Cash On the Meridian Bancorp, Inc. (EBSB) Wagon, Should You?

Page 1 of 2

Phill Gross and Robert Atchinson‘s Adage Capital Management has inched up its stake in Meridian Bancorp, Inc. (NASDAQ:EBSB) by acquiring some 141,900 shares according to a new 13G filing. The stake now consists of 2.79 million shares valued at $36.40 million, based on current trading levels, and represents 5.07% of the company’s outstanding stock.

Phill Gross

The Gross and Atchinson duo was a star performer at the Harvard Management Company (HMC) before launching their own fund in 2001. Gross, who spent 18 years at HMC, started out as a healthcare and retail analyst and later became a partner. Adage currently has about $48.2 billion worth of assets under management and the market value of its public equity portfolio stood at $41.02 billion at the end of the first quarter. The portfolio is fairly diversified with its top ten holdings constituting about 13.8% of the portfolio value. The finance sector accounted for 13% of the holdings, with the fund’s other top finance picks being JPMorgan Chase & Co. (NYSE:JPM), and Citigroup Inc (NYSE:C), which we’ll get to later. So far this year, the sector is up by more than 10%.

Follow Phill Gross's Adage Capital Management

Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 83 percentage points, returning over 142% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.

Adage has held a position in Meridian Bancorp, Inc. (NASDAQ:EBSB) since the third quarter of 2014. The $712 million company is a holding company for East Boston Savings Bank and held its IPO in July of last year. The savings bank founded in 1848 is a Massachusetts chartered stock savings bank. Currently the company operates 27 service branches. In its latest financial results, Meridian Bancorp, Inc. (NASDAQ:EBSB) delivered an EPS which was in-line with the estimates and revenues that beat expectations. Since its IPO, the stock has climbed by more than 23%. In comparison, the savings & cooperative banks industry has risen by about 16% during the same period. Among Meridian Bancorp, Inc. (NASDAQ:EBSB)’s investors among the funds we track is Emanuel J. Friedman‘s EJF Capital, which is the second-largest stockholder of Meridian Bancorp, Inc. (NASDAQ:EBSB) after Adage Capital, holding about 2.0 million shares valued at $26.34 million.

Page 1 of 2