How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding PCB Bancorp (NASDAQ:PCB).
PCB Bancorp (NASDAQ:PCB) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 6. PCB investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 5 hedge funds in our database with PCB holdings at the end of December. Our calculations also showed that PCB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are plenty of metrics market participants have at their disposal to evaluate stocks. Some of the less utilized metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can beat the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Lindenbaum of Basswood Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 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. With all of this in mind we’re going to analyze the new hedge fund action surrounding PCB Bancorp (NASDAQ:PCB).
Do Hedge Funds Think PCB Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in PCB over the last 23 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.
According to Insider Monkey’s hedge fund database, EJF Capital, managed by Emanuel J. Friedman, holds the most valuable position in PCB Bancorp (NASDAQ:PCB). EJF Capital has a $17.8 million position in the stock, comprising 1.3% of its 13F portfolio. On EJF Capital’s heels is Basswood Capital, managed by Matthew Lindenbaum, which holds a $11.2 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish include Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and . In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to PCB Bancorp (NASDAQ:PCB), around 1.28% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 0.5 percent of its 13F equity portfolio to PCB.
Seeing as PCB Bancorp (NASDAQ:PCB) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that elected to cut their full holdings by the end of the first quarter. Interestingly, Roger Ibbotson’s Zebra Capital Management dumped the biggest position of all the hedgies followed by Insider Monkey, comprising about $0.5 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks similar to PCB Bancorp (NASDAQ:PCB). We will take a look at Hurco Companies, Inc. (NASDAQ:HURC), Bluerock Residential Growth REIT Inc (NYSE:BRG), Alpha Metallurgical Resources, Inc. (NYSE:AMR), Leaf Group Ltd (NYSE:LEAF), IntriCon Corporation (NASDAQ:IIN), Central Valley Community Bancorp (NASDAQ:CVCY), and Timberland Bancorp, Inc. (NASDAQ:TSBK). All of these stocks’ market caps resemble PCB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HURC | 7 | 41714 | 4 |
| BRG | 7 | 7011 | 4 |
| AMR | 19 | 65061 | 0 |
| LEAF | 15 | 66994 | -5 |
| IIN | 3 | 39969 | 0 |
| CVCY | 3 | 4657 | -1 |
| TSBK | 6 | 30762 | 0 |
| Average | 8.6 | 36595 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $30 million in PCB’s case. Alpha Metallurgical Resources, Inc. (NYSE:AMR) is the most popular stock in this table. On the other hand IntriCon Corporation (NASDAQ:IIN) is the least popular one with only 3 bullish hedge fund positions. PCB Bancorp (NASDAQ:PCB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PCB is 27.1. 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 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 beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on PCB, though not to the same extent, as the stock returned 8.1% since the end of Q1 (through June 11th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
