Hedge Funds Are Nibbling On Malvern Bancorp, Inc. (MLVF)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. In this article we look at what those investors think of Malvern Bancorp, Inc. (NASDAQ:MLVF).

Malvern Bancorp, Inc. (NASDAQ:MLVF) investors should be aware of an increase in hedge fund sentiment in recent months. MLVF was in 5 hedge funds’ portfolios at the end of March. There were 4 hedge funds in our database with MLVF holdings at the end of the previous quarter. Our calculations also showed that MLVF 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Jim Simons of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the 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 recent hedge fund action regarding Malvern Bancorp, Inc. (NASDAQ:MLVF).

How have hedgies been trading Malvern Bancorp, Inc. (NASDAQ:MLVF)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in MLVF a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MLVF A Good Stock To Buy?

Among these funds, Seidman Investment Partnership held the most valuable stake in Malvern Bancorp, Inc. (NASDAQ:MLVF), which was worth $8.6 million at the end of the third quarter. On the second spot was EJF Capital which amassed $7.8 million worth of shares. Renaissance Technologies, Fourthstone LLC, and Minerva Advisors 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 Seidman Investment Partnership allocated the biggest weight to Malvern Bancorp, Inc. (NASDAQ:MLVF), around 10.64% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, setting aside 1.65 percent of its 13F equity portfolio to MLVF.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Fourthstone LLC, managed by Phil Stone, created the biggest position in Malvern Bancorp, Inc. (NASDAQ:MLVF). Fourthstone LLC had $0.8 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Malvern Bancorp, Inc. (NASDAQ:MLVF). We will take a look at California BanCorp (NASDAQ:CALB), Scully Royalty Ltd. (NYSE:SRL), First Savings Financial Group, Inc. (NASDAQ:FSFG), and PlayAGS, Inc. (NYSE:AGS). This group of stocks’ market values resemble MLVF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CALB 4 9702 4
SRL 2 6171 0
FSFG 4 4528 -2
AGS 17 16302 0
Average 6.75 9176 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $19 million in MLVF’s case. PlayAGS, Inc. (NYSE:AGS) is the most popular stock in this table. On the other hand Scully Royalty Ltd. (NYSE:SRL) is the least popular one with only 2 bullish hedge fund positions. Malvern Bancorp, Inc. (NASDAQ:MLVF) 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately MLVF wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MLVF investors were disappointed as the stock returned -3% 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.

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