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Hedge Funds Are Souring On CB Financial Services, Inc. (CBFV)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of CB Financial Services, Inc. (NASDAQ:CBFV) based on that data.

CB Financial Services, Inc. (NASDAQ:CBFV) has seen a decrease in support from the world’s most elite money managers of late. CBFV was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with CBFV positions at the end of the previous quarter. Our calculations also showed that CBFV 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 51 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

RENAISSANCE TECHNOLOGIES

Jim Simons Founder 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 take a gander at the new hedge fund action surrounding CB Financial Services, Inc. (NASDAQ:CBFV).

Hedge fund activity in CB Financial Services, Inc. (NASDAQ:CBFV)

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the fourth quarter of 2019. On the other hand, there were a total of 2 hedge funds with a bullish position in CBFV a year ago. So, let’s see 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, Renaissance Technologies, holds the biggest position in CB Financial Services, Inc. (NASDAQ:CBFV). Renaissance Technologies has a $1.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $0.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Jeffrey Gendell’s Tontine Asset Management, Fred Cummings’s Elizabeth Park Capital Management and . In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to CB Financial Services, Inc. (NASDAQ:CBFV), around 0.2% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to CBFV.

Due to the fact that CB Financial Services, Inc. (NASDAQ:CBFV) has faced declining sentiment from hedge fund managers, it’s safe to say that there is a sect of funds that slashed their full holdings last quarter. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $0.4 million in stock. Donald Sussman’s fund, Paloma Partners, also said goodbye to its stock, about $0.4 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CB Financial Services, Inc. (NASDAQ:CBFV) but similarly valued. We will take a look at Union Bankshares, Inc. (NASDAQ:UNB), CymaBay Therapeutics Inc (NASDAQ:CBAY), Cidara Therapeutics Inc (NASDAQ:CDTX), and SEACOR Marine Holdings Inc. (NYSE:SMHI). All of these stocks’ market caps are closest to CBFV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UNB 1 547 0
CBAY 14 41611 -5
CDTX 10 21826 1
SMHI 6 9532 0
Average 7.75 18379 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $3 million in CBFV’s case. CymaBay Therapeutics Inc (NASDAQ:CBAY) is the most popular stock in this table. On the other hand Union Bankshares, Inc. (NASDAQ:UNB) is the least popular one with only 1 bullish hedge fund positions. CB Financial Services, Inc. (NASDAQ:CBFV) is not the least popular stock in this group but hedge fund interest is still below average. 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 still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on CBFV as the stock returned 25.3% during the second quarter and outperformed the market by an even larger margin.

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