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. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of MetroCity Bankshares, Inc. (NASDAQ:MCBS).
MetroCity Bankshares, Inc. (NASDAQ:MCBS) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. At the end of this article we will also compare MCBS to other stocks including Powell Industries, Inc. (NASDAQ:POWL), Barrett Business Services, Inc. (NASDAQ:BBSI), and El Pollo LoCo Holdings Inc (NASDAQ:LOCO) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 44 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the fresh hedge fund action regarding MetroCity Bankshares, Inc. (NASDAQ:MCBS).
What have hedge funds been doing with MetroCity Bankshares, Inc. (NASDAQ:MCBS)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MCBS over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ravi Chopra’s Azora Capital has the largest position in MetroCity Bankshares, Inc. (NASDAQ:MCBS), worth close to $2.9 million, comprising 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Interval Partners, led by Gregg Moskowitz, holding a $0.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Israel Englander’s Millennium Management, Chuck Royce’s Royce & Associates and . In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to MetroCity Bankshares, Inc. (NASDAQ:MCBS), around 1.11% of its 13F portfolio. Interval Partners is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to MCBS.
Judging by the fact that MetroCity Bankshares, Inc. (NASDAQ:MCBS) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedgies that slashed their positions entirely in the third quarter. Intriguingly, Emanuel J. Friedman’s EJF Capital dropped the biggest stake of all the hedgies watched by Insider Monkey, totaling close to $0.3 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund said goodbye to about $0.2 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to MetroCity Bankshares, Inc. (NASDAQ:MCBS). We will take a look at Powell Industries, Inc. (NASDAQ:POWL), Barrett Business Services, Inc. (NASDAQ:BBSI), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), and Corporacion America Airports SA (NYSE:CAAP). This group of stocks’ market values match MCBS’s market value.
|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 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $4 million in MCBS’s case. Powell Industries, Inc. (NASDAQ:POWL) is the most popular stock in this table. On the other hand Corporacion America Airports SA (NYSE:CAAP) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks MetroCity Bankshares, Inc. (NASDAQ:MCBS) is even less popular than CAAP. Hedge funds dodged a bullet by taking a bearish stance towards MCBS. 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 MCBS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MCBS investors were disappointed as the stock returned -0.6% 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.