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Hedge Funds Watching Colony Bankcorp Inc (CBAN) From Afar

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Colony Bankcorp Inc (NASDAQ:CBAN) based on that data.

Colony Bankcorp Inc (NASDAQ:CBAN) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare CBAN to other stocks including Beyond Air, Inc. (NASDAQ:XAIR), Lifetime Brands Inc (NASDAQ:LCUT), and Fennec Pharmaceuticals Inc. (NASDAQ:FENC) to get a better sense of its popularity.

Video: 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’ 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 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.

Wall Street Bull

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 trades like this one. 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 let’s check out the key hedge fund action surrounding Colony Bankcorp Inc (NASDAQ:CBAN).

What have hedge funds been doing with Colony Bankcorp Inc (NASDAQ:CBAN)?

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 0% from the fourth quarter of 2019. By comparison, 4 hedge funds held shares or bullish call options in CBAN a year ago. So, let’s examine 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, Fourthstone LLC, managed by Phil Stone, holds the number one position in Colony Bankcorp Inc (NASDAQ:CBAN). Fourthstone LLC has a $6.5 million position in the stock, comprising 6% of its 13F portfolio. The second most bullish fund manager is Polaris Capital Management, managed by Bernard Horn, which holds a $5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include Jeffrey Gendell’s Tontine Asset Management, Renaissance Technologies and . In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Colony Bankcorp Inc (NASDAQ:CBAN), around 5.95% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, setting aside 0.42 percent of its 13F equity portfolio to CBAN.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Colony Bankcorp Inc (NASDAQ:CBAN) but similarly valued. These stocks are Beyond Air, Inc. (NASDAQ:XAIR), Lifetime Brands Inc (NASDAQ:LCUT), Fennec Pharmaceuticals Inc. (NASDAQ:FENC), and Biglari Holdings Inc (NYSE:BH). All of these stocks’ market caps are similar to CBAN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XAIR 4 4495 1
LCUT 2 1001 0
FENC 7 47183 -2
BH 10 17128 -1
Average 5.75 17452 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $14 million in CBAN’s case. Biglari Holdings Inc (NYSE:BH) is the most popular stock in this table. On the other hand Lifetime Brands Inc (NASDAQ:LCUT) is the least popular one with only 2 bullish hedge fund positions. Colony Bankcorp Inc (NASDAQ:CBAN) 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 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 surpassed the market by 13.2 percentage points. Unfortunately CBAN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CBAN investors were disappointed as the stock returned 2.6% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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