Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Meridian Corporation (NASDAQ:MRBK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Meridian Corporation (NASDAQ:MRBK) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of September. At the end of this article we will also compare MRBK to other stocks including Eastman Kodak Co. (NYSE:KODK), SilverBow Resorces, Inc. (NYSE:SBOW), and Hovnanian Enterprises, Inc. (NYSE:HOV) to get a better sense of its popularity.
Video: Click the image to 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to take a peek at the recent hedge fund action surrounding Meridian Corporation (NASDAQ:MRBK).
How are hedge funds trading Meridian Corporation (NASDAQ:MRBK)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in MRBK a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Basswood Capital was the largest shareholder of Meridian Corporation (NASDAQ:MRBK), with a stake worth $9.9 million reported as of the end of September. Trailing Basswood Capital was MFP Investors, which amassed a stake valued at $5.3 million. EJF Capital, Tudor Investment Corp, and Ancora Advisors 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 MFP Investors allocated the biggest weight to Meridian Corporation (NASDAQ:MRBK), around 0.74% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, designating 0.72 percent of its 13F equity portfolio to MRBK.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Meridian Corporation (NASDAQ:MRBK) but similarly valued. We will take a look at Eastman Kodak Co. (NYSE:KODK), SilverBow Resorces, Inc. (NYSE:SBOW), Hovnanian Enterprises, Inc. (NYSE:HOV), and VOXX International Corp (NASDAQ:VOXX). This group of stocks’ market valuations are closest to MRBK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KODK | 5 | 13670 | 0 |
| SBOW | 6 | 68043 | 1 |
| HOV | 8 | 8758 | 5 |
| VOXX | 8 | 28594 | -1 |
| Average | 6.75 | 29766 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $21 million in MRBK’s case. Hovnanian Enterprises, Inc. (NYSE:HOV) is the most popular stock in this table. On the other hand Eastman Kodak Co. (NYSE:KODK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Meridian Corporation (NASDAQ:MRBK) is even less popular than KODK. 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. A small number of hedge funds were also right about betting on MRBK, though not to the same extent, as the stock returned 7.4% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.