Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Reliant Bancorp, Inc. (NASDAQ:RBNC).
Is Reliant Bancorp, Inc. (NASDAQ:RBNC) a buy here? Prominent investors are taking an optimistic view. The number of bullish hedge fund positions inched up by 3 in recent months. Our calculations also showed that RBNC 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 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. 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.
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 check out the latest hedge fund action surrounding Reliant Bancorp, Inc. (NASDAQ:RBNC).
What have hedge funds been doing with Reliant Bancorp, Inc. (NASDAQ:RBNC)?
At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 150% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RBNC over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Fourthstone LLC held the most valuable stake in Reliant Bancorp, Inc. (NASDAQ:RBNC), which was worth $2.3 million at the end of the third quarter. On the second spot was Mendon Capital Advisors which amassed $1.1 million worth of shares. Renaissance Technologies, Castine Capital Management, and Millennium 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 Fourthstone LLC allocated the biggest weight to Reliant Bancorp, Inc. (NASDAQ:RBNC), around 2.13% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, designating 0.55 percent of its 13F equity portfolio to RBNC.
Consequently, specific money managers were breaking ground themselves. Fourthstone LLC, managed by Phil Stone, assembled the biggest position in Reliant Bancorp, Inc. (NASDAQ:RBNC). Fourthstone LLC had $2.3 million invested in the company at the end of the quarter. Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to Reliant Bancorp, Inc. (NASDAQ:RBNC). These stocks are MainStreet Bancshares, Inc. (NASDAQ:MNSB), First Business Financial Services Inc (NASDAQ:FBIZ), BankFinancial Corporation (NASDAQ:BFIN), and Luokung Technology Corp (NASDAQ:LKCO). All of these stocks’ market caps are closest to RBNC’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 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $5 million in RBNC’s case. First Business Financial Services Inc (NASDAQ:FBIZ) is the most popular stock in this table. On the other hand MainStreet Bancshares, Inc. (NASDAQ:MNSB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Reliant Bancorp, Inc. (NASDAQ:RBNC) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on RBNC as the stock returned 25.2% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.