The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded First Community Corporation (NASDAQ:FCCO) based on those filings.
First Community Corporation (NASDAQ:FCCO) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that FCCO 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.
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. With all of this in mind we’re going to take a glance at the latest hedge fund action encompassing First Community Corporation (NASDAQ:FCCO).
Hedge fund activity in First Community Corporation (NASDAQ:FCCO)
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FCCO over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Fred Cummings’s Elizabeth Park Capital Management has the number one position in First Community Corporation (NASDAQ:FCCO), worth close to $5.7 million, accounting for 4.3% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, which holds a $1.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Israel Englander’s Millennium Management, Michael Gelband’s ExodusPoint Capital and Donald Sussman’s Paloma Partners. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to First Community Corporation (NASDAQ:FCCO), around 4.32% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to FCCO.
Since First Community Corporation (NASDAQ:FCCO) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of funds that decided to sell off their positions entirely by the end of the first quarter. Interestingly, Phil Stone’s Fourthstone LLC cut the biggest investment of the 750 funds monitored by Insider Monkey, worth about $0.3 million in stock, and David Nguyen and Nancy Oh’s One68 Global Capital was right behind this move, as the fund cut about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as First Community Corporation (NASDAQ:FCCO) but similarly valued. We will take a look at Colony Bankcorp Inc (NASDAQ:CBAN), Beyond Air, Inc. (NASDAQ:XAIR), Lifetime Brands Inc (NASDAQ:LCUT), and Fennec Pharmaceuticals Inc. (NASDAQ:FENC). This group of stocks’ market valuations match FCCO’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $8 million in FCCO’s case. Fennec Pharmaceuticals Inc. (NASDAQ:FENC) is the most popular stock in this table. On the other hand Lifetime Brands Inc (NASDAQ:LCUT) is the least popular one with only 2 bullish hedge fund positions. First Community Corporation (NASDAQ:FCCO) 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately FCCO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FCCO were disappointed as the stock returned -5.1% 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.
Disclosure: None. This article was originally published at Insider Monkey.