Is SB One Bancorp (SBBX) A Good Stock To Buy?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards SB One Bancorp (NASDAQ:SBBX).

Is SB One Bancorp (NASDAQ:SBBX) the right pick for your portfolio? The smart money is getting less bullish. The number of long hedge fund positions went down by 1 in recent months. Our calculations also showed that SBBX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). SBBX was in 6 hedge funds’ portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with SBBX holdings at the end of the previous quarter.

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

In the eyes of most shareholders, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are over 8000 funds with their doors open at the moment, Our experts hone in on the aristocrats of this group, about 850 funds. These hedge fund managers command the majority of all hedge funds’ total capital, and by monitoring their matchless equity investments, Insider Monkey has identified many investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the fresh hedge fund action regarding SB One Bancorp (NASDAQ:SBBX).

How have hedgies been trading SB One Bancorp (NASDAQ:SBBX)?

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in SBBX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Tudor Investment Corp was the largest shareholder of SB One Bancorp (NASDAQ:SBBX), with a stake worth $4.1 million reported as of the end of September. Trailing Tudor Investment Corp was Basswood Capital, which amassed a stake valued at $1.6 million. Highland Capital Management, Renaissance Technologies, and Winton Capital Management 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 Tudor Investment Corp allocated the biggest weight to SB One Bancorp (NASDAQ:SBBX), around 0.37% of its 13F portfolio. Highland Capital Management is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to SBBX.

Due to the fact that SB One Bancorp (NASDAQ:SBBX) has faced a decline in interest from hedge fund managers, it’s easy to see that there was a specific group of hedge funds who sold off their positions entirely heading into Q4. Interestingly, Emanuel J. Friedman’s EJF Capital said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $6.8 million in stock. Israel Englander’s fund, Millennium Management, also cut its stock, about $0.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SB One Bancorp (NASDAQ:SBBX) but similarly valued. These stocks are Chiasma Inc (NASDAQ:CHMA), Cerecor Inc. (NASDAQ:CERC), Orrstown Financial Services, Inc. (NASDAQ:ORRF), and CalAmp Corp. (NASDAQ:CAMP). All of these stocks’ market caps are similar to SBBX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHMA 12 45011 0
CERC 5 76950 1
ORRF 3 6992 1
CAMP 12 93779 3
Average 8 55683 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $9 million in SBBX’s case. Chiasma Inc (NASDAQ:CHMA) is the most popular stock in this table. On the other hand Orrstown Financial Services, Inc. (NASDAQ:ORRF) is the least popular one with only 3 bullish hedge fund positions. SB One Bancorp (NASDAQ:SBBX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately SBBX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SBBX investors were disappointed as the stock returned 9.4% during the second quarter 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 in 2020.

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