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SB Financial Group, Inc. (SBFG): Hedge Funds In Wait-and-See Mode

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of SB Financial Group, Inc. (NASDAQ:SBFG).

SB Financial Group, Inc. (NASDAQ:SBFG) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. 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 Alithya Group inc. (NASDAQ:ALYA), Exantas Capital Corp. (NYSE:XAN), and Marker Therapeutics, Inc. (NASDAQ:MRKR) to gather more data points. Our calculations also showed that SBFG 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.

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 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Izzy Englander of MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

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. Keeping this in mind let’s review the fresh hedge fund action encompassing SB Financial Group, Inc. (NASDAQ:SBFG).

How are hedge funds trading SB Financial Group, Inc. (NASDAQ:SBFG)?

Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in SBFG a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Is SBFG A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, EJF Capital, managed by Emanuel J. Friedman, holds the most valuable position in SB Financial Group, Inc. (NASDAQ:SBFG). EJF Capital has a $7 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is Fourthstone LLC, led by Phil Stone, holding a $1.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Jeffrey Gendell’s Tontine Asset Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to SB Financial Group, Inc. (NASDAQ:SBFG), around 1.47% of its 13F portfolio. Fourthstone LLC is also relatively very bullish on the stock, earmarking 0.98 percent of its 13F equity portfolio to SBFG.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SB Financial Group, Inc. (NASDAQ:SBFG) but similarly valued. These stocks are Alithya Group inc. (NASDAQ:ALYA), Exantas Capital Corp. (NYSE:XAN), Marker Therapeutics, Inc. (NASDAQ:MRKR), and Chimerix Inc (NASDAQ:CMRX). This group of stocks’ market values resemble SBFG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALYA 5 7426 0
XAN 11 14181 -5
MRKR 5 3475 -1
CMRX 11 13139 2
Average 8 9555 -1

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 $10 million. That figure was $9 million in SBFG’s case. Exantas Capital Corp. (NYSE:XAN) is the most popular stock in this table. On the other hand Alithya Group inc. (NASDAQ:ALYA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks SB Financial Group, Inc. (NASDAQ:SBFG) is even less popular than ALYA. Hedge funds clearly dropped the ball on SBFG as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on SBFG as the stock returned 38.8% so far in the second quarter and outperformed the market by an even larger margin.

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