How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Middlefield Banc Corp. (NASDAQ:MBCN).
Hedge fund interest in Middlefield Banc Corp. (NASDAQ:MBCN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MBCN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Vislink Technologies, Inc. (NASDAQ:VISL), Blueknight Energy Partners L.P. (NASDAQ:BKEP), and Union Bankshares, Inc. (NASDAQ:UNB) to gather more data points.
To the average investor there are many signals investors have at their disposal to evaluate publicly traded companies. Some of the best signals are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outperform their index-focused peers by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the latest hedge fund action regarding Middlefield Banc Corp. (NASDAQ:MBCN).
Do Hedge Funds Think MBCN Is A Good Stock To Buy Now?
At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in MBCN 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.
The largest stake in Middlefield Banc Corp. (NASDAQ:MBCN) was held by Ancora Advisors, which reported holding $8.7 million worth of stock at the end of December. It was followed by Elizabeth Park Capital Management with a $1.9 million position. The only other hedge fund that is bullish on the company was Renaissance Technologies.
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 similar to Middlefield Banc Corp. (NASDAQ:MBCN). These stocks are Vislink Technologies, Inc. (NASDAQ:VISL), Blueknight Energy Partners L.P. (NASDAQ:BKEP), Union Bankshares, Inc. (NASDAQ:UNB), AEterna Zentaris Inc. (NASDAQ:AEZS), Oblong Inc. (NYSE:OBLG), Nicholas Financial, Inc. (NASDAQ:NICK), and CollPlant Biotechnologies Ltd. (NASDAQ:CLGN). This group of stocks’ market caps are similar to MBCN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VISL | 4 | 588 | 3 |
| BKEP | 4 | 13718 | 1 |
| UNB | 2 | 1571 | 0 |
| AEZS | 3 | 963 | 2 |
| OBLG | 3 | 25393 | 2 |
| NICK | 2 | 27278 | -1 |
| CLGN | 1 | 229 | 0 |
| Average | 2.7 | 9963 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $12 million in MBCN’s case. Vislink Technologies, Inc. (NASDAQ:VISL) is the most popular stock in this table. On the other hand CollPlant Biotechnologies Ltd. (NASDAQ:CLGN) is the least popular one with only 1 bullish hedge fund positions. Middlefield Banc Corp. (NASDAQ:MBCN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MBCN is 56.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on MBCN as the stock returned 13.8% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
