Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Bank of Marin Bancorp (NASDAQ:BMRC).
Bank of Marin Bancorp (NASDAQ:BMRC) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 8. BMRC investors should pay attention to a decrease in hedge fund interest of late. There were 8 hedge funds in our database with BMRC holdings at the end of June. Our calculations also showed that BMRC 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.
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 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. Now let’s check out the latest hedge fund action regarding Bank of Marin Bancorp (NASDAQ:BMRC).
How are hedge funds trading Bank of Marin Bancorp (NASDAQ:BMRC)?
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. On the other hand, there were a total of 6 hedge funds with a bullish position in BMRC a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Bank of Marin Bancorp (NASDAQ:BMRC), which was worth $6.6 million at the end of the third quarter. On the second spot was Winton Capital Management which amassed $1 million worth of shares. Citadel Investment Group, Two Sigma Advisors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Bank of Marin Bancorp (NASDAQ:BMRC), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to BMRC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Engineers Gate Manager. 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 none of the 750+ hedge funds tracked by Insider Monkey identified BMRC as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Bank of Marin Bancorp (NASDAQ:BMRC) but similarly valued. These stocks are HCI Group Inc (NYSE:HCI), Kaleido BioSciences, Inc. (NASDAQ:KLDO), Newtek Business Services Corp (NASDAQ:NEWT), Hingham Institution for Savings (NASDAQ:HIFS), Grid Dynamics Holdings, Inc. (NASDAQ:GDYN), Marinus Pharmaceuticals Inc (NASDAQ:MRNS), and Franklin Street Properties Corp. (NYSE:FSP). All of these stocks’ market caps are closest to BMRC’s market cap.
|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 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $10 million in BMRC’s case. Franklin Street Properties Corp. (NYSE:FSP) is the most popular stock in this table. On the other hand Hingham Institution for Savings (NASDAQ:HIFS) is the least popular one with only 1 bullish hedge fund positions. Bank of Marin Bancorp (NASDAQ:BMRC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BMRC is 51.7. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on BMRC as the stock returned 25.8% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.