We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Ameris Bancorp (NASDAQ:ABCB).
Hedge fund interest in Ameris Bancorp (NASDAQ:ABCB) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare ABCB to other stocks including Penn National Gaming, Inc (NASDAQ:PENN), PTC Therapeutics, Inc. (NASDAQ:PTCT), and The Chemours Company (NYSE:CC) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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 let’s go over the latest hedge fund action surrounding Ameris Bancorp (NASDAQ:ABCB).
What have hedge funds been doing with Ameris Bancorp (NASDAQ:ABCB)?
At the end of the fourth quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ABCB over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Polaris Capital Management, managed by Bernard Horn, holds the largest position in Ameris Bancorp (NASDAQ:ABCB). Polaris Capital Management has a $47.1 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Anton Schutz of Mendon Capital Advisors, with a $41.5 million position; 7.1% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions include Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management, Emanuel J. Friedman’s EJF Capital and Ira Unschuld’s Brant Point Investment Management. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Ameris Bancorp (NASDAQ:ABCB), around 7.13% of its 13F portfolio. Castine Capital Management is also relatively very bullish on the stock, earmarking 5.75 percent of its 13F equity portfolio to ABCB.
Judging by the fact that Ameris Bancorp (NASDAQ:ABCB) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that elected to cut their entire stakes last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of the 750 funds monitored by Insider Monkey, comprising close to $5.5 million in stock. Noam Gottesman’s fund, GLG Partners, also sold off its stock, about $3.7 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ameris Bancorp (NASDAQ:ABCB) but similarly valued. These stocks are Penn National Gaming, Inc (NASDAQ:PENN), PTC Therapeutics, Inc. (NASDAQ:PTCT), The Chemours Company (NYSE:CC), and Itau CorpBanca (NYSE:ITCB). All of these stocks’ market caps match ABCB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PENN | 27 | 131433 | 2 |
| PTCT | 34 | 605873 | -2 |
| CC | 29 | 332478 | -1 |
| ITCB | 1 | 2800 | 0 |
| Average | 22.75 | 268146 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $268 million. That figure was $160 million in ABCB’s case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table. On the other hand Itau CorpBanca (NYSE:ITCB) is the least popular one with only 1 bullish hedge fund positions. Ameris Bancorp (NASDAQ:ABCB) 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately ABCB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ABCB investors were disappointed as the stock returned -49.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
