Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS) shareholders have witnessed an increase in hedge fund interest of late. It syncs perfectly with the stock trading sentiment, as the shares of the company jumped 6.97% during the third quarter. For a better understanding of the hedge fund behavior, we will find out more about the hedge funds holding positions in Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS) at the end of the previous quarter.
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 Conatus Pharmaceuticals Inc (NASDAQ:CNAT), Alliqua Biomedical Inc (NASDAQ:ALQA), and YuMe Inc (NYSE:YUME) to gather more data points.
Follow Eastern Virginia Bankshares Inc (NASDAQ:EVBS)
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In the eyes of most investors, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are over 8000 funds trading today, we hone in on the leaders of this club, approximately 700 funds. These money managers have their hands on the majority of all hedge funds’ total asset base, and by monitoring their highest performing stock picks, Insider Monkey has determined numerous investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to take a look at the new action surrounding Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS).
How are hedge funds trading Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 25% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Emanuel J. Friedman’s EJF Capital has the most valuable position in Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS), worth close to $4.5 million, amounting to 0.2% of its total 13F portfolio. The second largest stake is held by Basswood Capital, led by Matthew Lindenbaum, holding a $3.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions encompass Jeffrey Bronchick’s Cove Street Capital, Paul J. Isaac’s Arbiter Partners Capital Management. and Israel Englander’s Millennium Management.
As one would reasonably expect, some big names have been driving this bullishness. Millennium Management established the largest position in Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS). Millennium Management had $0.1 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks similar to Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS). These stocks are Conatus Pharmaceuticals Inc (NASDAQ:CNAT), Alliqua Biomedical Inc (NASDAQ:ALQA), YuMe Inc (NYSE:YUME), and Fuel Systems Solutions, Inc. (NASDAQ:FSYS). This group of stocks’ market valuations are closest to Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNAT | 10 | 11657 | 1 |
| ALQA | 9 | 17063 | 0 |
| YUME | 5 | 2162 | -4 |
| FSYS | 5 | 16702 | -3 |
As you can see, these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $9 million in Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS)’s case. Conatus Pharmaceuticals Inc (NASDAQ:CNAT) is the most popular stock in this table. On the other hand, YuMe Inc (NYSE:YUME) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks, Eastern Virginia Bankshares, Inc. (NASDAQ:EVBS) is even less popular than YuMe Inc (NYSE:YUME). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
