Hedge Funds Are Buying Carolina Bank Holding Inc. (NC) (CLBH)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) in this article.

Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) investors should pay attention to an increase in support from the world’s most elite money managers lately. A similar sentiment was echoed in the stock market, with the shares of Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) improving 7.22% throughout the quarter. In order to understand more about the hedge fund behavior, we will discuss hedge funds that held Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) in their portfolio, at the end of the last quarter.

The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Vericel Corp (NASDAQ:VCEL), Town Sports International Holdings, Inc. (NASDAQ:CLUB), and Ion Geophysical Corp (NYSE:IO) to gather more data points.

According to most investors, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are greater than 8000 funds in operation at the moment, our experts choose to focus on the top tier of this group, approximately 700 funds. It is estimated that this group of investors manages the majority of the hedge fund industry’s total asset base, and by following their finest investments, Insider Monkey has come up with a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, let’s go over the recent action regarding Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH).

How are hedge funds trading Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH)?

At the end of Q3, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 33% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Matthew Lindenbaum’s Basswood Capital has the number one position in Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH), worth close to $5.5 million, comprising 0.3% of its total 13F portfolio. The second most bullish fund manager is Endicott Management, managed by Robert I. Usdan and Wayne K. Goldstein, which holds a $3.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Emanuel J. Friedman’s EJF Capital, and Fred Cummings’s Elizabeth Park Capital Management.

Now, key money managers were leading the bulls’ herd. Elizabeth Park Capital Management initiated the biggest position in Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH). Elizabeth Park Capital Management had $0.3 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks similar to Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH). We will take a look at Vericel Corp (NASDAQ:VCEL), Town Sports International Holdings, Inc. (NASDAQ:CLUB), Ion Geophysical Corp (NYSE:IO), and Global Power Equipment Group Inc (NASDAQ:GLPW). This group of stocks’ market caps are similar to Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH)’s market cap.

As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $11 million in Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH)’s case. Global Power Equipment Group Inc (NASDAQ:GLPW) is the most popular stock in this table. On the other hand, Vericel Corp (NASDAQ:VCEL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks, Carolina Bank Holding Inc. (NC) (NASDAQ:CLBH) is even less popular than Vericel Corp (NASDAQ:VCEL). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.