The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Equity Bancshares, Inc. (NASDAQ:EQBK)?
Equity Bancshares, Inc. (NASDAQ:EQBK) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare EQBK to other stocks including CRA International, Inc. (NASDAQ:CRAI), Pure Cycle Corporation (NASDAQ:PCYO), and Ethan Allen Interiors Inc. (NYSE:ETH) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action surrounding Equity Bancshares, Inc. (NASDAQ:EQBK).
How have hedgies been trading Equity Bancshares, Inc. (NASDAQ:EQBK)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EQBK over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Anton Schutz’s Mendon Capital Advisors has the largest position in Equity Bancshares, Inc. (NASDAQ:EQBK), worth close to $15.4 million, corresponding to 7.5% of its total 13F portfolio. On Mendon Capital Advisors’s heels is Mark Lee of Forest Hill Capital, with a $4.6 million position; 2.4% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish consist of Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Equity Bancshares, Inc. (NASDAQ:EQBK), around 7.54% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, designating 2.43 percent of its 13F equity portfolio to EQBK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. 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 Millennium Management).
Let’s go over hedge fund activity in other stocks similar to Equity Bancshares, Inc. (NASDAQ:EQBK). These stocks are CRA International, Inc. (NASDAQ:CRAI), Pure Cycle Corporation (NASDAQ:PCYO), Ethan Allen Interiors Inc. (NYSE:ETH), and BJ’s Restaurants, Inc. (NASDAQ:BJRI). All of these stocks’ market caps match EQBK’s market cap.
|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 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $25 million in EQBK’s case. Pure Cycle Corporation (NASDAQ:PCYO) is the most popular stock in this table. On the other hand CRA International, Inc. (NASDAQ:CRAI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Equity Bancshares, Inc. (NASDAQ:EQBK) is even less popular than CRAI. Hedge funds dodged a bullet by taking a bearish stance towards EQBK. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately EQBK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); EQBK investors were disappointed as the stock returned -5.4% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.