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Level One Bancorp, Inc. (LEVL): Hedge Funds Are In Wait-and-See Mode

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Level One Bancorp, Inc. (NASDAQ:LEVL) based on that data.

Hedge fund interest in Level One Bancorp, Inc. (NASDAQ:LEVL) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Iteris Inc (NYSE:ITI), Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI), and At Home Group Inc. (NYSE:HOME) to gather more data points. Our calculations also showed that LEVL 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).

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

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. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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. Keeping this in mind let’s take a look at the recent hedge fund action encompassing Level One Bancorp, Inc. (NASDAQ:LEVL).

How have hedgies been trading Level One Bancorp, Inc. (NASDAQ:LEVL)?

Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LEVL over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is LEVL A Good Stock To Buy?

The largest stake in Level One Bancorp, Inc. (NASDAQ:LEVL) was held by Renaissance Technologies, which reported holding $0.4 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $0.2 million position. The only other hedge fund that is bullish on the company was Ancora Advisors.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks similar to Level One Bancorp, Inc. (NASDAQ:LEVL). These stocks are Iteris Inc (NYSE:ITI), Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI), At Home Group Inc. (NYSE:HOME), and Senseonics Holdings, Inc. (NYSE:SENS). This group of stocks’ market valuations resemble LEVL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ITI 11 11871 0
BCLI 4 4001 1
HOME 14 47358 -4
SENS 7 3396 0
Average 9 16657 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $1 million in LEVL’s case. At Home Group Inc. (NYSE:HOME) is the most popular stock in this table. On the other hand Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Level One Bancorp, Inc. (NASDAQ:LEVL) is even less popular than BCLI. Hedge funds dodged a bullet by taking a bearish stance towards LEVL. 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 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately LEVL wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); LEVL investors were disappointed as the stock returned -5.6% during the second quarter (through May 22nd) 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.