An avid fan of financial stocks, Matthew Lindenbaum has been busy adjusting positions as of late. In a recent filing with the Securities and Exchange Commission, Lindenbaum’s fund, Basswood Capital, has revealed a decrease in its holding of Metro Bancorp Inc (NASDAQ:METR) from the 1.4 million shares reported in its latest 13F filing to 674,421 shares, which account for roughly 4.76% of the company’s common stock.
With an experience of managing assets of more than 20 years, Matthew Lindenbaum is specializing in the financial sector and is known to have engaged in shareholder activism in Metro Bancorp Inc (NASDAQ:METR). Back in June, Lindenbaum sent a letter to the management of the company, urging them to consider the sale of the company to a larger bank amid increased competition and increased regulatory pressures. Basswood Capital has recently disclosed an activist stake in Astoria Financial Corp (NYSE:AF), increasing its stake to 9.29 million shares or 9.22% of the total number of shares outstanding, guided by Lindenbaum’s belief that Astoria shares are “trading at a significant discount to their fair value.” On the other hand, Sierra Bancorp (NASDAQ:BSRR) is a stock Lindenbaum has chosen to limit his exposure to, trimming his position to 1.07 million shares or 7.85% of the company’s common stock.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks have returned 123% since then and outperformed the S&P 500 Index by around 65 percentage points (see more details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
So, is Lindenbaum locking in profits or has Metro Bancorp lost appeal? Actually, neither. The company is actually set to undergo a merger with another bank holding company. First, a bit about Metro Bancorp Inc (NASDAQ:METR). A bank holding company, Metro offers financial services to consumers and small and mid-sized businesses throughout the state of Pennsylvania. The company has an estimated market value of $430 million and pays an annual dividend of $0.21 per share, which translates into a yield of 0.7%. For the past four quarters, the company’s financials have steadily grown to the $35.5 million in revenues and EPS of $0.39 reported for the first three months of 2015.