Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is ConnectOne Bancorp Inc (NASDAQ:CNOB) a buy, sell, or hold? Money managers are taking an optimistic view. The number of long hedge fund positions inched up by 3 recently. Our calculations also showed that CNOB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CNOB was in 12 hedge funds’ portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with CNOB positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the fresh hedge fund action regarding ConnectOne Bancorp Inc (NASDAQ:CNOB).
How have hedgies been trading ConnectOne Bancorp Inc (NASDAQ:CNOB)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CNOB over the last 17 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in ConnectOne Bancorp Inc (NASDAQ:CNOB), which was worth $23.7 million at the end of the third quarter. On the second spot was Basswood Capital which amassed $8.3 million worth of shares. Arrowstreet Capital, Seidman Investment Partnership, and D E Shaw 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 Seidman Investment Partnership allocated the biggest weight to ConnectOne Bancorp Inc (NASDAQ:CNOB), around 4.01% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, earmarking 0.61 percent of its 13F equity portfolio to CNOB.
Now, specific money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, established the largest position in ConnectOne Bancorp Inc (NASDAQ:CNOB). Winton Capital Management had $0.8 million invested in the company at the end of the quarter. Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management also made a $0.7 million investment in the stock during the quarter. The only other fund with a brand new CNOB position is Cliff Asness’s AQR Capital Management.
Let’s also examine hedge fund activity in other stocks similar to ConnectOne Bancorp Inc (NASDAQ:CNOB). These stocks are Despegar.com, Corp. (NYSE:DESP), Camping World Holdings, Inc. (NYSE:CWH), Comtech Telecommunications Corp. (NASDAQ:CMTL), and Cass Information Systems (NASDAQ:CASS). This group of stocks’ market valuations match CNOB’s market valuation.
|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 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $48 million in CNOB’s case. Comtech Telecommunications Corp. (NASDAQ:CMTL) is the most popular stock in this table. On the other hand Cass Information Systems (NASDAQ:CASS) is the least popular one with only 9 bullish hedge fund positions. ConnectOne Bancorp Inc (NASDAQ:CNOB) 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 CNOB as the stock returned 13.9% 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.