Middlefield Banc Corp. (NASDAQ:MBCN) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. MBCN was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with MBCN holdings at the end of the previous quarter. Our calculations also showed that MBCN 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.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
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 let’s analyze the fresh hedge fund action surrounding Middlefield Banc Corp. (NASDAQ:MBCN).
How are hedge funds trading Middlefield Banc Corp. (NASDAQ:MBCN)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in MBCN a year ago. So, let’s check out 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, Frederick DiSanto’s Ancora Advisors has the largest position in Middlefield Banc Corp. (NASDAQ:MBCN), worth close to $8.6 million, corresponding to 0.4% of its total 13F portfolio. The second largest stake is held by Elizabeth Park Capital Management, led by Fred Cummings, holding a $3.8 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Renaissance Technologies, Donald Sussman’s Paloma Partners and . In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to Middlefield Banc Corp. (NASDAQ:MBCN), around 1.5% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, designating 0.38 percent of its 13F equity portfolio to MBCN.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Elizabeth Park Capital Management, managed by Fred Cummings, initiated the most valuable position in Middlefield Banc Corp. (NASDAQ:MBCN). Elizabeth Park Capital Management had $3.8 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 Middlefield Banc Corp. (NASDAQ:MBCN). These stocks are MAM Software Group Inc. (NASDAQ:MAMS), Prudential Bancorp, Inc. of PA (NASDAQ:PBIP), CB Financial Services, Inc. (NASDAQ:CBFV), and Hawthorn Bancshares, Inc. (NASDAQ:HWBK). This group of stocks’ market values resemble MBCN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAMS | 5 | 39958 | 1 |
| PBIP | 4 | 31193 | 0 |
| CBFV | 4 | 3882 | 1 |
| HWBK | 3 | 3766 | 1 |
| Average | 4 | 19700 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $15 million in MBCN’s case. MAM Software Group Inc. (NASDAQ:MAMS) is the most popular stock in this table. On the other hand Hawthorn Bancshares, Inc. (NASDAQ:HWBK) is the least popular one with only 3 bullish hedge fund positions. Middlefield Banc Corp. (NASDAQ:MBCN) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on MBCN as the stock returned 12.9% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.