After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards First Mid Bancshares, Inc. (NASDAQ:FMBH).
First Mid Bancshares, Inc. (NASDAQ:FMBH) shareholders have witnessed an increase in hedge fund interest lately. FMBH was in 5 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with FMBH holdings at the end of the previous quarter. Our calculations also showed that FMBH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a peek at the new hedge fund action encompassing First Mid Bancshares, Inc. (NASDAQ:FMBH).
How have hedgies been trading First Mid Bancshares, Inc. (NASDAQ:FMBH)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FMBH over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in First Mid Bancshares, Inc. (NASDAQ:FMBH), which was worth $4.6 million at the end of the third quarter. On the second spot was Castine Capital Management which amassed $4.3 million worth of shares. Winton Capital Management, Citadel Investment Group, and Zebra Capital Management 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 Castine Capital Management allocated the biggest weight to First Mid Bancshares, Inc. (NASDAQ:FMBH), around 1.19% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.4 percent of its 13F equity portfolio to FMBH.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Winton Capital Management, managed by David Harding, initiated the largest position in First Mid Bancshares, Inc. (NASDAQ:FMBH). Winton Capital Management had $1.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.4 million investment in the stock during the quarter.
Let’s go over hedge fund activity in other stocks similar to First Mid Bancshares, Inc. (NASDAQ:FMBH). These stocks are Tucows Inc. (NASDAQ:TCX), Accel Entertainment, Inc. (NYSE:TPGH), Modine Manufacturing Company (NYSE:MOD), and Independence Holding Company (NYSE:IHC). All of these stocks’ market caps match FMBH’s market cap.
|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 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $11 million in FMBH’s case. Accel Entertainment, Inc. (NYSE:TPGH) is the most popular stock in this table. On the other hand Independence Holding Company (NYSE:IHC) is the least popular one with only 4 bullish hedge fund positions. First Mid Bancshares, Inc. (NASDAQ:FMBH) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FMBH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FMBH investors were disappointed as the stock returned 2.2% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.