At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Unity Bancorp, Inc. (NASDAQ:UNTY) makes for a good investment right now.
Hedge fund interest in Unity Bancorp, Inc. (NASDAQ:UNTY) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare UNTY to other stocks including Stratus Properties Inc. (NASDAQ:STRS), Synchronoss Technologies, Inc. (NASDAQ:SNCR), and Parke Bancorp, Inc. (NASDAQ:PKBK) to get a better sense of its popularity.
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If you’d ask most market participants, hedge funds are seen as unimportant, outdated financial vehicles of yesteryear. While there are over 8000 funds trading at the moment, We choose to focus on the aristocrats of this group, approximately 750 funds. These money managers have their hands on the lion’s share of the smart money’s total asset base, and by following their matchless equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s analyze the recent hedge fund action encompassing Unity Bancorp, Inc. (NASDAQ:UNTY).
How are hedge funds trading Unity Bancorp, Inc. (NASDAQ:UNTY)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in UNTY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Robert I. Usdan and Wayne K. Goldstein’s Endicott Management has the number one position in Unity Bancorp, Inc. (NASDAQ:UNTY), worth close to $14.6 million, amounting to 13.1% of its total 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $10.9 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish consist of Emanuel J. Friedman’s EJF Capital, Renaissance Technologies and . In terms of the portfolio weights assigned to each position Endicott Management allocated the biggest weight to Unity Bancorp, Inc. (NASDAQ:UNTY), around 13.14% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, setting aside 1.19 percent of its 13F equity portfolio to UNTY.
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 check out hedge fund activity in other stocks similar to Unity Bancorp, Inc. (NASDAQ:UNTY). These stocks are Stratus Properties Inc. (NASDAQ:STRS), Synchronoss Technologies, Inc. (NASDAQ:SNCR), Parke Bancorp, Inc. (NASDAQ:PKBK), and Silicom Ltd. (NASDAQ:SILC). This group of stocks’ market values are closest to UNTY’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 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $35 million in UNTY’s case. Synchronoss Technologies, Inc. (NASDAQ:SNCR) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 3 bullish hedge fund positions. Unity Bancorp, Inc. (NASDAQ:UNTY) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately UNTY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UNTY investors were disappointed as the stock returned 0% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.