Is FCBP Stock A Buy?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about First Choice Bancorp (NASDAQ:FCBP) in this article.

Is FCBP stock a buy? First Choice Bancorp (NASDAQ:FCBP) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. FCBP shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 3 hedge funds in our database with FCBP holdings at the end of December. Our calculations also showed that FCBP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to analyze the fresh hedge fund action encompassing First Choice Bancorp (NASDAQ:FCBP).

Do Hedge Funds Think FCBP Is A Good Stock To Buy Now?

At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the fourth quarter of 2020. By comparison, 1 hedge funds held shares or bullish call options in FCBP 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.

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in First Choice Bancorp (NASDAQ:FCBP), worth close to $1.7 million, comprising less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Emanuel J. Friedman of EJF Capital, with a $0.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions encompass John D. Gillespie’s Prospector Partners, Roger Ibbotson’s Zebra Capital Management and . In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to First Choice Bancorp (NASDAQ:FCBP), around 0.22% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to FCBP.

Now, key hedge funds were breaking ground themselves. EJF Capital, managed by Emanuel J. Friedman, initiated the most outsized position in First Choice Bancorp (NASDAQ:FCBP). EJF Capital had $0.9 million invested in the company at the end of the quarter.

Let’s go over hedge fund activity in other stocks similar to First Choice Bancorp (NASDAQ:FCBP). We will take a look at Progenity, Inc. (NASDAQ:PROG), Infinity Pharmaceuticals Inc. (NASDAQ:INFI), Exagen Inc. (NASDAQ:XGN), Newpark Resources Inc (NYSE:NR), Green Plains Partners LP (NASDAQ:GPP), Kezar Life Sciences, Inc. (NASDAQ:KZR), and Smith Micro Software, Inc. (NASDAQ:SMSI). All of these stocks’ market caps resemble FCBP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $3 million in FCBP’s case. Infinity Pharmaceuticals Inc. (NASDAQ:INFI) is the most popular stock in this table. On the other hand Green Plains Partners LP (NASDAQ:GPP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks First Choice Bancorp (NASDAQ:FCBP) is even less popular than GPP. Our overall hedge fund sentiment score for FCBP is 36. 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. Hedge funds clearly dropped the ball on FCBP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on FCBP as the stock returned 31.2% since Q1 (through June 11th) and outperformed the market by an even larger margin.

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

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