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 Central Valley Community Bancorp (NASDAQ:CVCY).
Central Valley Community Bancorp (NASDAQ:CVCY) has experienced a decrease in hedge fund interest recently. Central Valley Community Bancorp (NASDAQ:CVCY) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. Our calculations also showed that CVCY 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 10 most profitable companies in the world 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. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Central Valley Community Bancorp (NASDAQ:CVCY).
How are hedge funds trading Central Valley Community Bancorp (NASDAQ:CVCY)?
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -40% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CVCY over the last 21 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the largest position in Central Valley Community Bancorp (NASDAQ:CVCY). Renaissance Technologies has a $2.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Prospector Partners, led by John D. Gillespie, holding a $0.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Central Valley Community Bancorp (NASDAQ:CVCY), around 0.12% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to CVCY.
Seeing as Central Valley Community Bancorp (NASDAQ:CVCY) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $0.2 million in stock. Roger Ibbotson’s fund, Zebra Capital Management, also sold off its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Central Valley Community Bancorp (NASDAQ:CVCY). These stocks are Smith Micro Software, Inc. (NASDAQ:SMSI), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Ames National Corporation (NASDAQ:ATLO), Steel Partners Holdings LP (NYSE:SPLP), VolitionRX Limited (NYSE:VNRX), Fennec Pharmaceuticals Inc. (NASDAQ:FENC), and Cherry Hill Mortgage Investment Corp (NYSE:CHMI). This group of stocks’ market valuations are similar to CVCY’s market valuation.
|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 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $4 million in CVCY’s case. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 2 bullish hedge fund positions. Central Valley Community Bancorp (NASDAQ:CVCY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVCY is 23. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on CVCY as the stock returned 19.1% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.