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Hedge Funds Cautiously Watching PCB Bancorp (PCB)

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 PCB Bancorp (NASDAQ:PCB) based on that data.

PCB Bancorp (NASDAQ:PCB) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare PCB to other stocks including OncoCyte Corporation (NYSE:OCX), Chemung Financial Corp. (NASDAQ:CHMG), and Green Plains Partners LP (NASDAQ:GPP) to get a better sense of its popularity.

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Roger Ibbotson of Zebra Capital Management

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. Now we’re going to take a look at the latest hedge fund action regarding PCB Bancorp (NASDAQ:PCB).

What does smart money think about PCB Bancorp (NASDAQ:PCB)?

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in PCB 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.

Of the funds tracked by Insider Monkey, Emanuel J. Friedman’s EJF Capital has the most valuable position in PCB Bancorp (NASDAQ:PCB), worth close to $10.4 million, accounting for 2.2% of its total 13F portfolio. On EJF Capital’s heels is Renaissance Technologies, holding a $1.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise Roger Ibbotson’s Zebra Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Phil Stone’s Fourthstone LLC. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to PCB Bancorp (NASDAQ:PCB), around 2.19% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.62 percent of its 13F equity portfolio to PCB.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Fourthstone LLC).

Let’s now review hedge fund activity in other stocks similar to PCB Bancorp (NASDAQ:PCB). We will take a look at OncoCyte Corporation (NYSE:OCX), Chemung Financial Corp. (NASDAQ:CHMG), Green Plains Partners LP (NASDAQ:GPP), and MVB Financial Corp. (NASDAQ:MVBF). This group of stocks’ market caps are closest to PCB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OCX 5 48092 1
CHMG 3 9092 0
GPP 2 15954 1
MVBF 7 18486 3
Average 4.25 22906 1.25

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 $23 million. That figure was $12 million in PCB’s case. MVB Financial Corp. (NASDAQ:MVBF) is the most popular stock in this table. On the other hand Green Plains Partners LP (NASDAQ:GPP) is the least popular one with only 2 bullish hedge fund positions. PCB Bancorp (NASDAQ:PCB) 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 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately PCB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PCB were disappointed as the stock returned -1.4% 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.