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Community Financial Corp (TCFC): Hedge Funds In Wait-and-See Mode

In this article we will check out the progression of hedge fund sentiment towards Community Financial Corp (NASDAQ:TCFC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Community Financial Corp (NASDAQ:TCFC) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. At the end of this article we will also compare TCFC to other stocks including Saratoga Investment Corp (NYSE:SAR), Hamilton Beach Brands Holding Company (NYSE:HBB), and Republic First Bancorp, Inc. (NASDAQ:FRBK) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are tons of methods stock market investors employ to assess their holdings. Two of the best methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a significant margin (see the details here).

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding Community Financial Corp (NASDAQ:TCFC).

What have hedge funds been doing with Community Financial Corp (NASDAQ:TCFC)?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TCFC over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TCFC A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Phil Stone’s Fourthstone LLC has the number one position in Community Financial Corp (NASDAQ:TCFC), worth close to $10 million, amounting to 9.1% of its total 13F portfolio. Coming in second is Gregg J. Powers of Private Capital Management, with a $3.5 million position; the fund has 1.1% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Community Financial Corp (NASDAQ:TCFC), around 9.09% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, designating 1.1 percent of its 13F equity portfolio to TCFC.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Community Financial Corp (NASDAQ:TCFC) but similarly valued. These stocks are Saratoga Investment Corp (NYSE:SAR), Hamilton Beach Brands Holding Company (NYSE:HBB), Republic First Bancorp, Inc. (NASDAQ:FRBK), and VolitionRX Limited (NYSE:VNRX). This group of stocks’ market caps match TCFC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAR 5 2482 -1
HBB 7 1843 1
FRBK 7 3468 1
VNRX 1 454 -1
Average 5 2062 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $15 million in TCFC’s case. Hamilton Beach Brands Holding Company (NYSE:HBB) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 1 bullish hedge fund positions. Community Financial Corp (NASDAQ:TCFC) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately TCFC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TCFC investors were disappointed as the stock returned 3.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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