In this article we will take a look at whether hedge funds think Eagle Bancorp, Inc. (NASDAQ:EGBN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is EGBN a good stock to buy now? Investors who are in the know were reducing their bets on the stock. The number of long hedge fund bets retreated by 2 recently. Eagle Bancorp, Inc. (NASDAQ:EGBN) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. 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 for a quick look at the top 5 stocks). There were 15 hedge funds in our database with EGBN holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 15 best blue chip stocks 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 we’re going to take a gander at the fresh hedge fund action encompassing Eagle Bancorp, Inc. (NASDAQ:EGBN).
Do Hedge Funds Think EGBN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EGBN over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Eagle Bancorp, Inc. (NASDAQ:EGBN), which was worth $4.8 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $3.4 million worth of shares. Renaissance Technologies, Basswood Capital, and Citadel Investment Group 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 Basswood Capital allocated the biggest weight to Eagle Bancorp, Inc. (NASDAQ:EGBN), around 0.1% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to EGBN.
Since Eagle Bancorp, Inc. (NASDAQ:EGBN) has witnessed bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of money managers who were dropping their full holdings heading into Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest investment of the 750 funds watched by Insider Monkey, worth about $1.2 million in stock. David Harding’s fund, Winton Capital Management, also dumped its stock, about $1.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
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. These stocks are BGC Partners, Inc. (NASDAQ:BGCP), John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), The RMR Group Inc. (NASDAQ:RMR), Ladder Capital Corp (NYSE:LADR), Forestar Group Inc. (NYSE:FOR), Arcos Dorados Holding Inc (NYSE:ARCO), and NextGen Healthcare, Inc. (NASDAQ:NXGN). This group of stocks’ market valuations resemble EGBN’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $17 million in EGBN’s case. BGC Partners, Inc. (NASDAQ:BGCP) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 11 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. Our overall hedge fund sentiment score for EGBN is 31.9. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on EGBN as the stock returned 49.3% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.