Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Lakeland Bancorp, Inc. (NASDAQ:LBAI)? The smart money sentiment can provide an answer to this question.
Lakeland Bancorp, Inc. (NASDAQ:LBAI) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. LBAI has seen a decrease in hedge fund sentiment in recent months. There were 13 hedge funds in our database with LBAI holdings at the end of June. Our calculations also showed that LBAI 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.
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 we’re going to take a gander at the new hedge fund action encompassing Lakeland Bancorp, Inc. (NASDAQ:LBAI).
Do Hedge Funds Think LBAI Is A Good Stock To Buy Now?
At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in LBAI 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.
More specifically, Renaissance Technologies was the largest shareholder of Lakeland Bancorp, Inc. (NASDAQ:LBAI), with a stake worth $9.6 million reported as of the end of September. Trailing Renaissance Technologies was Basswood Capital, which amassed a stake valued at $2.8 million. Elizabeth Park Capital Management, Arrowstreet Capital, and D E Shaw 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 Elizabeth Park Capital Management allocated the biggest weight to Lakeland Bancorp, Inc. (NASDAQ:LBAI), around 1.52% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, earmarking 1.06 percent of its 13F equity portfolio to LBAI.
Because Lakeland Bancorp, Inc. (NASDAQ:LBAI) has experienced falling interest from hedge fund managers, it’s easy to see that there was a specific group of hedge funds that slashed their positions entirely last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $0.4 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also dumped its stock, about $0.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lakeland Bancorp, Inc. (NASDAQ:LBAI) but similarly valued. We will take a look at Origin Bancorp, Inc. (NASDAQ:OBNK), TCG BDC, Inc. (NASDAQ:CGBD), Neoleukin Therapeutics, Inc. (NASDAQ:NLTX), Fusion Pharmaceuticals Inc. (NASDAQ:FUSN), Extreme Networks, Inc (NASDAQ:EXTR), CymaBay Therapeutics Inc (NASDAQ:CBAY), and Tredegar Corporation (NYSE:TG). This group of stocks’ market caps match LBAI’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 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $22 million in LBAI’s case. Neoleukin Therapeutics, Inc. (NASDAQ:NLTX) is the most popular stock in this table. On the other hand Origin Bancorp, Inc. (NASDAQ:OBNK) is the least popular one with only 6 bullish hedge fund positions. Lakeland Bancorp, Inc. (NASDAQ:LBAI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LBAI is 47.6. 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 LBAI as the stock returned 29.9% 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.