Is Eagle Bancorp, Inc. (EGBN) A Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Eagle Bancorp, Inc. (NASDAQ:EGBN).

Eagle Bancorp, Inc. (NASDAQ:EGBN) was in 15 hedge funds’ portfolios at the end of September. EGBN has seen an increase in enthusiasm from smart money of late. There were 11 hedge funds in our database with EGBN holdings at the end of the previous quarter. Our calculations also showed that EGBN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

According to most market participants, hedge funds are viewed as slow, outdated investment vehicles of the past. While there are more than 8000 funds trading at the moment, Our researchers hone in on the aristocrats of this club, about 750 funds. Most estimates calculate that this group of people preside over bulk of all hedge funds’ total capital, and by observing their highest performing equity investments, Insider Monkey has identified numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Tom Brown of Second Curve Capital

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 take a glance at the fresh hedge fund action surrounding Eagle Bancorp, Inc. (NASDAQ:EGBN).

What have hedge funds been doing with Eagle Bancorp, Inc. (NASDAQ:EGBN)?

Heading into the fourth quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in EGBN a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Millennium Management held the most valuable stake in Eagle Bancorp, Inc. (NASDAQ:EGBN), which was worth $15.9 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $4.7 million worth of shares. Second Curve Capital, Fisher Asset Management, and Arrowstreet Capital 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 Second Curve Capital allocated the biggest weight to Eagle Bancorp, Inc. (NASDAQ:EGBN), around 2.46% of its 13F portfolio. Lucas Capital Management is also relatively very bullish on the stock, dishing out 0.59 percent of its 13F equity portfolio to EGBN.

As one would reasonably expect, key money managers have jumped into Eagle Bancorp, Inc. (NASDAQ:EGBN) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in Eagle Bancorp, Inc. (NASDAQ:EGBN). Arrowstreet Capital had $2.4 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Hoon Kim’s Quantinno Capital, David E. Shaw’s D E Shaw, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Eagle Bancorp, Inc. (NASDAQ:EGBN) but similarly valued. We will take a look at Meritor Inc (NYSE:MTOR), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), Easterly Government Properties Inc (NYSE:DEA), and Archrock, Inc. (NYSE:AROC). This group of stocks’ market caps match EGBN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTOR 23 262577 0
APLS 24 349532 7
DEA 9 82346 3
AROC 11 20540 3
Average 16.75 178749 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $179 million. That figure was $39 million in EGBN’s case. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the most popular stock in this table. On the other hand Easterly Government Properties Inc (NYSE:DEA) is the least popular one with only 9 bullish hedge fund positions. Eagle Bancorp, Inc. (NASDAQ:EGBN) 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 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. Unfortunately EGBN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EGBN investors were disappointed as the stock returned 0.1% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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