Is Colony Bankcorp Inc (NASDAQ:CBAN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Colony Bankcorp Inc (NASDAQ:CBAN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CBAN 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 SMTC Corporation (NASDAQ:SMTX), First Community Corporation (NASDAQ:FCCO), and First Northwest Bancorp (NASDAQ:FNWB) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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. With all of this in mind let’s take a look at the new hedge fund action encompassing Colony Bankcorp Inc (NASDAQ:CBAN).
How have hedgies been trading Colony Bankcorp Inc (NASDAQ:CBAN)?
At third quarter’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CBAN over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Colony Bankcorp Inc (NASDAQ:CBAN) was held by Fourthstone LLC, which reported holding $4.3 million worth of stock at the end of September. It was followed by Polaris Capital Management with a $4.2 million position. Other investors bullish on the company included Tontine Asset Management, Renaissance Technologies, and GAMCO Investors. In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Colony Bankcorp Inc (NASDAQ:CBAN), around 3.64% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to CBAN.
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 now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Colony Bankcorp Inc (NASDAQ:CBAN) but similarly valued. We will take a look at SMTC Corporation (NASDAQ:SMTX), First Community Corporation (NASDAQ:FCCO), First Northwest Bancorp (NASDAQ:FNWB), Xinyuan Real Estate Co., Ltd. (NYSE:XIN), Plumas Bancorp (NASDAQ:PLBC), ReneSola Ltd. (NYSE:SOL), and Mackinac Financial Corporation (NASDAQ:MFNC). This group of stocks’ market valuations are closest to CBAN’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 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $11 million in CBAN’s case. Mackinac Financial Corporation (NASDAQ:MFNC) is the most popular stock in this table. On the other hand Plumas Bancorp (NASDAQ:PLBC) is the least popular one with only 1 bullish hedge fund positions. Colony Bankcorp Inc (NASDAQ:CBAN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CBAN is 75. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on CBAN as the stock returned 31.9% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.