Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Community Bankers Trust Corporation (NASDAQ:ESXB).
Is Community Bankers Trust Corporation (NASDAQ:ESXB) worth your attention right now? The smart money is in a pessimistic mood. The number of bullish hedge fund positions dropped by 1 lately. Our calculations also showed that ESXB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are many methods stock traders have at their disposal to appraise their stock investments. A pair of the less known methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outperform the market by a healthy amount (see the details here).
[caption id="attachment_26073" align="aligncenter" width="450"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's go over the latest hedge fund action regarding Community Bankers Trust Corporation (NASDAQ:ESXB).
Hedge fund activity in Community Bankers Trust Corporation (NASDAQ:ESXB)
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the second quarter of 2019. By comparison, 4 hedge funds held shares or bullish call options in ESXB a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Community Bankers Trust Corporation (NASDAQ:ESXB) was held by Castine Capital Management, which reported holding $16.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $1.7 million position. The only other hedge fund that is bullish on the company was Mendon Capital Advisors.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. 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 ESXB 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 Community Bankers Trust Corporation (NASDAQ:ESXB) but similarly valued. These stocks are HOOKIPA Pharma Inc. (NASDAQ:HOOK), Ferroglobe PLC (NASDAQ:GSM), Cue Biopharma, Inc. (NASDAQ:CUE), and Roan Resources, Inc. (NYSE:ROAN). This group of stocks' market caps are similar to ESXB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HOOK,6,33847,1 GSM,9,24128,-2 CUE,5,21860,4 ROAN,13,58682,-1 Average,8.25,34629,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $18 million in ESXB's case. Roan Resources, Inc. (NYSE:ROAN) is the most popular stock in this table. On the other hand Cue Biopharma, Inc. (NASDAQ:CUE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Community Bankers Trust Corporation (NASDAQ:ESXB) is even less popular than CUE. Hedge funds dodged a bullet by taking a bearish stance towards ESXB. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ESXB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ESXB investors were disappointed as the stock returned 1% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.