Where Do Hedge Funds Stand On United Security Bancshares (UBFO)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about United Security Bancshares (NASDAQ:UBFO) in this article.

United Security Bancshares (NASDAQ:UBFO) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that UBFO 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 Capricor Therapeutics, Inc. (NASDAQ:CAPR), HireQuest, Inc. (NASDAQ:HQI), and Maiden Holdings, Ltd. (NASDAQ:MHLD) 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.

Roger Ibbotson of Zebra Capital Management

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. Keeping this in mind let’s analyze the new hedge fund action surrounding United Security Bancshares (NASDAQ:UBFO).

How have hedgies been trading United Security Bancshares (NASDAQ:UBFO)?

Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UBFO over the last 21 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in United Security Bancshares (NASDAQ:UBFO) was held by Renaissance Technologies, which reported holding $1.2 million worth of stock at the end of September. It was followed by Zebra Capital Management with a $0.3 million position. The only other hedge fund that is bullish on the company was Arrowstreet Capital.

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 United Security Bancshares (NASDAQ:UBFO) but similarly valued. We will take a look at Capricor Therapeutics, Inc. (NASDAQ:CAPR), HireQuest, Inc. (NASDAQ:HQI), Maiden Holdings, Ltd. (NASDAQ:MHLD), Fang Holdings Limited (NYSE:SFUN), SB Financial Group, Inc. (NASDAQ:SBFG), First Western Financial, Inc. (NASDAQ:MYFW), and PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS). This group of stocks’ market valuations match UBFO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAPR 1 186 -3
HQI 1 90 -1
MHLD 6 11451 -1
SFUN 2 572 0
SBFG 2 8879 0
MYFW 3 4673 0
PHAS 5 6170 -2
Average 2.9 4574 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $2 million in UBFO’s case. Maiden Holdings, Ltd. (NASDAQ:MHLD) is the most popular stock in this table. On the other hand Capricor Therapeutics, Inc. (NASDAQ:CAPR) is the least popular one with only 1 bullish hedge fund positions. United Security Bancshares (NASDAQ:UBFO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UBFO is 43. 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. Hedge funds were also right about betting on UBFO as the stock returned 16.8% since the end of Q3 (through 11/23) 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.