How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Century Bancorp, Inc. (NASDAQ:CNBKA).
Hedge fund interest in Century Bancorp, Inc. (NASDAQ:CNBKA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CNBKA 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 CNBKA to other stocks including INDUS Realty Trust, Inc. (NASDAQ:INDT), Innate Pharma S.A. (NASDAQ:IPHA), and Naked Brand Group Limited (NASDAQ:NAKD) to get a better sense of its popularity.
According to most investors, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are over 8000 funds trading at the moment, Our experts look at the upper echelon of this club, around 850 funds. Most estimates calculate that this group of people command bulk of the smart money’s total asset base, and by watching their highest performing stock picks, Insider Monkey has discovered many investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 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. Keeping this in mind we’re going to analyze the new hedge fund action encompassing Century Bancorp, Inc. (NASDAQ:CNBKA).
Do Hedge Funds Think CNBKA Is A Good Stock To Buy Now?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in CNBKA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in Century Bancorp, Inc. (NASDAQ:CNBKA). Renaissance Technologies has a $16.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Minerva Advisors, led by David P. Cohen, holding a $1.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other peers that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Century Bancorp, Inc. (NASDAQ:CNBKA), around 0.9% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to CNBKA.
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 Two Sigma Advisors).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Century Bancorp, Inc. (NASDAQ:CNBKA) but similarly valued. We will take a look at INDUS Realty Trust, Inc. (NASDAQ:INDT), Innate Pharma S.A. (NASDAQ:IPHA), Naked Brand Group Limited (NASDAQ:NAKD), Entravision Communications Corporation (NYSE:EVC), Macatawa Bank Corporation (NASDAQ:MCBC), Loop Industries, Inc. (NASDAQ:LOOP), and NVE Corporation (NASDAQ:NVEC). All of these stocks’ market caps are closest to CNBKA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INDT | 8 | 86852 | 4 |
| IPHA | 2 | 323 | 1 |
| NAKD | 4 | 206 | 3 |
| EVC | 12 | 21781 | 1 |
| MCBC | 8 | 19477 | -2 |
| LOOP | 2 | 685 | 1 |
| NVEC | 8 | 49231 | -1 |
| Average | 6.3 | 25508 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.3 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $19 million in CNBKA’s case. Entravision Communications Corporation (NYSE:EVC) is the most popular stock in this table. On the other hand Innate Pharma S.A. (NASDAQ:IPHA) is the least popular one with only 2 bullish hedge fund positions. Century Bancorp, Inc. (NASDAQ:CNBKA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNBKA is 39. 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. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on CNBKA as the stock returned 22.8% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
Follow Century Bancorp Inc (NASDAQ:CNBKA)
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Disclosure: None. This article was originally published at Insider Monkey.
