In this article we are going to use hedge fund sentiment as a tool and determine whether The Bancorp, Inc. (NASDAQ:TBBK) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is TBBK a good stock to buy now? The Bancorp, Inc. (NASDAQ:TBBK) shareholders have witnessed an increase in support from the world’s most elite money managers lately. The Bancorp, Inc. (NASDAQ:TBBK) was in 18 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. Our calculations also showed that TBBK 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.
To the average investor there are a multitude of indicators shareholders employ to assess their stock investments. Two of the best indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best investment managers can outclass the S&P 500 by a very impressive amount (see the details here).
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 look at the latest hedge fund action surrounding The Bancorp, Inc. (NASDAQ:TBBK).
Do Hedge Funds Think TBBK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TBBK over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the most valuable position in The Bancorp, Inc. (NASDAQ:TBBK), worth close to $22.7 million, corresponding to 0.7% of its total 13F portfolio. The second most bullish fund manager is Peter Schliemann of Rutabaga Capital Management, with a $8.2 million position; 4.7% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Tom Brown’s Second Curve Capital and Michael Price’s MFP Investors. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to The Bancorp, Inc. (NASDAQ:TBBK), around 13.77% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, earmarking 4.66 percent of its 13F equity portfolio to TBBK.
As aggregate interest increased, some big names were leading the bulls’ herd. Ulysses Management, managed by Joshua Nash, initiated the most valuable position in The Bancorp, Inc. (NASDAQ:TBBK). Ulysses Management had $1.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Ken Griffin’s Citadel Investment Group, and Greg Eisner’s Engineers Gate Manager.
Let’s check out hedge fund activity in other stocks similar to The Bancorp, Inc. (NASDAQ:TBBK). We will take a look at FutureFuel Corp. (NYSE:FF), Varex Imaging Corporation (NASDAQ:VREX), Northern Dynasty Minerals Ltd. (NYSE:NAK), NOW Inc (NYSE:DNOW), A10 Networks Inc (NYSE:ATEN), Stoneridge, Inc. (NYSE:SRI), and Transocean Ltd (NYSE:RIG). This group of stocks’ market values resemble TBBK’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 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $55 million in TBBK’s case. A10 Networks Inc (NYSE:ATEN) is the most popular stock in this table. On the other hand Northern Dynasty Minerals Ltd. (NYSE:NAK) is the least popular one with only 7 bullish hedge fund positions. The Bancorp, Inc. (NASDAQ:TBBK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBBK is 66.4. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on TBBK as the stock returned 56.4% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.