How Mercantile Bank Corp. (MBWM) Compares To Its Peers

We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Algert Coldiron Investors).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mercantile Bank Corp. (NASDAQ:MBWM) but similarly valued. These stocks are Western Asset Mortgage Capital Corp (NYSE:WMC), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), NewLink Genetics Corp (NASDAQ:NLNK), and Winmark Corporation (NASDAQ:WINA). This group of stocks’ market caps match MBWM’s market cap.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $24 million in MBWM’s case. NewLink Genetics Corp (NASDAQ:NLNK) is the most popular stock in this table. On the other hand Winmark Corporation (NASDAQ:WINA) is the least popular one with only 3 bullish hedge fund positions. Mercantile Bank Corp. (NASDAQ:MBWM) 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. In this regard NLNK might be a better candidate to consider taking a long position in.

Disclosure: None