Is PVBC A Good Stock To Buy Now?

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Provident Bancorp, Inc. (NASDAQ:PVBC).

Is PVBC a good stock to buy now? Provident Bancorp, Inc. (NASDAQ:PVBC) has experienced an increase in activity from the world’s largest hedge funds in recent months. Provident Bancorp, Inc. (NASDAQ:PVBC) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. There were 5 hedge funds in our database with PVBC holdings at the end of June. Our calculations also showed that PVBC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Lawrence Seidman of Seidman Investment Partnership

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Provident Bancorp, Inc. (NASDAQ:PVBC).

What does smart money think about Provident Bancorp, Inc. (NASDAQ:PVBC)?

At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in PVBC over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Seidman Investment Partnership held the most valuable stake in Provident Bancorp, Inc. (NASDAQ:PVBC), which was worth $1.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $1.3 million worth of shares. Millennium Management, Royce & Associates, and MFP Investors 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 Seidman Investment Partnership allocated the biggest weight to Provident Bancorp, Inc. (NASDAQ:PVBC), around 2.28% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, designating 0.08 percent of its 13F equity portfolio to PVBC.

As one would reasonably expect, specific money managers have jumped into Provident Bancorp, Inc. (NASDAQ:PVBC) headfirst. Millennium Management, managed by Israel Englander, assembled the biggest position in Provident Bancorp, Inc. (NASDAQ:PVBC). Millennium Management had $0.9 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.1 million position during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Provident Bancorp, Inc. (NASDAQ:PVBC) but similarly valued. We will take a look at PDL Community Bancorp (NASDAQ:PDLB), Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT), Northeast Bank (NASDAQ:NBN), Silvercrest Asset Management Group Inc (NASDAQ:SAMG), Timberland Bancorp, Inc. (NASDAQ:TSBK), Penn Virginia Corporation (NASDAQ:PVAC), and Ramaco Resources, Inc. (NASDAQ:METC). This group of stocks’ market caps match PVBC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PDLB 3 2125 1
SBT 5 1478 -2
NBN 4 21639 -1
SAMG 3 8376 0
TSBK 4 18156 1
PVAC 9 25550 -2
METC 6 2809 -3
Average 4.9 11448 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $5 million in PVBC’s case. Penn Virginia Corporation (NASDAQ:PVAC) is the most popular stock in this table. On the other hand PDL Community Bancorp (NASDAQ:PDLB) is the least popular one with only 3 bullish hedge fund positions. Provident Bancorp, Inc. (NASDAQ:PVBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PVBC is 66.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on PVBC as the stock returned 32.5% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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