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Do Hedge Funds Love Eagle Bancorp, Inc. (EGBN)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtEagle Bancorp, Inc. (NASDAQ:EGBN) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Eagle Bancorp, Inc. (NASDAQ:EGBN) has experienced a decrease in hedge fund sentiment of late. EGBN was in 12 hedge funds’ portfolios at the end of the first quarter of 2020. There were 18 hedge funds in our database with EGBN positions at the end of the previous quarter. Our calculations also showed that EGBN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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

In the financial world there are dozens of methods shareholders use to value their stock investments. A couple of the most under-the-radar methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the market by a superb amount (see the details here).

Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the key hedge fund action surrounding Eagle Bancorp, Inc. (NASDAQ:EGBN).

What does smart money think about Eagle Bancorp, Inc. (NASDAQ:EGBN)?

At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EGBN over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, GAMCO Investors held the most valuable stake in Eagle Bancorp, Inc. (NASDAQ:EGBN), which was worth $3.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $2.5 million worth of shares. Basswood Capital, Winton Capital Management, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to Eagle Bancorp, Inc. (NASDAQ:EGBN), around 0.16% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to EGBN.

Because Eagle Bancorp, Inc. (NASDAQ:EGBN) has faced bearish sentiment from hedge fund managers, we can see that there was a specific group of hedgies that slashed their full holdings in the first quarter. It’s worth mentioning that Tom Brown’s Second Curve Capital dropped the biggest investment of the 750 funds monitored by Insider Monkey, comprising about $11.9 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $3.7 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 6 funds in the first quarter.

Let’s now review hedge fund activity in other stocks similar to Eagle Bancorp, Inc. (NASDAQ:EGBN). We will take a look at Lindsay Corporation (NYSE:LNN), Enerpac Tool Group Corp. (NYSE:EPAC), Radware Ltd. (NASDAQ:RDWR), and Materialise NV (NASDAQ:MTLS). This group of stocks’ market caps are closest to EGBN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LNN 11 170200 2
EPAC 14 171298 -6
RDWR 10 222282 -3
MTLS 3 6283 0
Average 9.5 142516 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $12 million in EGBN’s case. Enerpac Tool Group Corp. (NYSE:EPAC) is the most popular stock in this table. On the other hand Materialise NV (NASDAQ:MTLS) is the least popular one with only 3 bullish hedge fund positions. Eagle Bancorp, Inc. (NASDAQ:EGBN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately EGBN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EGBN were disappointed as the stock returned 9.2% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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