Is California BanCorp (CALB) A Good Stock To Buy?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards California BanCorp (NASDAQ:CALB).

Is California BanCorp (NASDAQ:CALB) the right pick for your portfolio? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets were cut by 1 in recent months. California BanCorp (NASDAQ:CALB) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. Our calculations also showed that CALB isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Emanuel J. Friedman

Emanuel Friedman of EJF Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s take a look at the fresh hedge fund action surrounding California BanCorp (NASDAQ:CALB).

How have hedgies been trading California BanCorp (NASDAQ:CALB)?

Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CALB over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in California BanCorp (NASDAQ:CALB) was held by Elizabeth Park Capital Management, which reported holding $1.7 million worth of stock at the end of September. It was followed by EJF Capital with a $1.6 million position. The only other hedge fund that is bullish on the company was Renaissance Technologies.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Castine Capital Management. 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 none of the 750+ hedge funds tracked by Insider Monkey identified CALB as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks similar to California BanCorp (NASDAQ:CALB). We will take a look at Charah Solutions, Inc. (NYSE:CHRA), Neuronetics, Inc. (NASDAQ:STIM), Milestone Scientific, Inc. (NYSE:MLSS), Outlook Therapeutics, Inc. (NASDAQ:OTLK), FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW), IEC Electronics Corp. (NASDAQ:IEC), and Union Bankshares, Inc. (NASDAQ:UNB). This group of stocks’ market caps match CALB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHRA 3 15167 -3
STIM 14 26688 6
MLSS 1 25 0
OTLK 8 368 4
FFNW 4 9784 -2
IEC 2 7039 0
UNB 3 1846 -1
Average 5 8702 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $3 million in CALB’s case. Neuronetics, Inc. (NASDAQ:STIM) is the most popular stock in this table. On the other hand Milestone Scientific, Inc. (NYSE:MLSS) is the least popular one with only 1 bullish hedge fund positions. California BanCorp (NASDAQ:CALB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CALB is 34.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on CALB as the stock returned 41.2% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.

Follow California Bancorp (NASDAQ:CALB)

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