In this article we will take a look at whether hedge funds think Banc of California, Inc. (NYSE:BANC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Banc of California, Inc. (NYSE:BANC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that BANC 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). 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 PBF Logistics LP (NYSE:PBFX), U.S. Lime & Minerals Inc. (NASDAQ:USLM), and TORM plc (NASDAQ:TRMD) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. Keeping this in mind let’s take a look at the new hedge fund action surrounding Banc of California, Inc. (NYSE:BANC).
Do Hedge Funds Think BANC Is A Good Stock To Buy Now?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in BANC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Banc of California, Inc. (NYSE:BANC) was held by MFP Investors, which reported holding $13.5 million worth of stock at the end of September. It was followed by Forest Hill Capital with a $6.5 million position. Other investors bullish on the company included Renaissance Technologies, Seidman Investment Partnership, and Mendon Capital Advisors. In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to Banc of California, Inc. (NYSE:BANC), around 4.52% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, designating 2.94 percent of its 13F equity portfolio to BANC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Castine Capital Management. 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 Paloma Partners).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Banc of California, Inc. (NYSE:BANC) but similarly valued. These stocks are PBF Logistics LP (NYSE:PBFX), U.S. Lime & Minerals Inc. (NASDAQ:USLM), TORM plc (NASDAQ:TRMD), Community Health Systems, Inc. (NYSE:CYH), IVERIC bio, Inc. (NASDAQ:ISEE), Brigham Minerals, Inc. (NYSE:MNRL), and TrustCo Bank Corp NY (NASDAQ:TRST). This group of stocks’ market values are closest to BANC’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 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $32 million in BANC’s case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand PBF Logistics LP (NYSE:PBFX) is the least popular one with only 3 bullish hedge fund positions. Banc of California, Inc. (NYSE:BANC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BANC is 42.3. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BANC as the stock returned 45.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.