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The Bancorp, Inc. (TBBK): Hedge Funds In Wait-and-See Mode

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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about The Bancorp, Inc. (NASDAQ:TBBK).

The Bancorp, Inc. (NASDAQ:TBBK) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of March. Our calculations also showed that TBBK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TBBK to other stocks including iTeos Therapeutics, Inc. (NASDAQ:ITOS), Seabridge Gold, Inc. (NYSE:SA), and Playa Hotels & Resorts N.V. (NASDAQ:PLYA) to get a better sense of its popularity.

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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we're going to go over the latest hedge fund action regarding The Bancorp, Inc. (NASDAQ:TBBK).

Do Hedge Funds Think TBBK Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in TBBK a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is TBBK A Good Stock To Buy?
Is TBBK A Good Stock To Buy?

Among these funds, Basswood Capital held the most valuable stake in The Bancorp, Inc. (NASDAQ:TBBK), which was worth $25.3 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $9.9 million worth of shares. Millennium Management, Rutabaga Capital Management, and Second Curve Capital 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 Second Curve Capital allocated the biggest weight to The Bancorp, Inc. (NASDAQ:TBBK), around 12.05% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, designating 4.16 percent of its 13F equity portfolio to TBBK.

Seeing as The Bancorp, Inc. (NASDAQ:TBBK) has faced falling interest from hedge fund managers, logic holds that there were a few fund managers that slashed their positions entirely heading into Q2. Interestingly, Renaissance Technologies sold off the biggest position of the 750 funds tracked by Insider Monkey, comprising an estimated $1.9 million in stock. Peter Algert's fund, Algert Global, also dropped its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's go over hedge fund activity in other stocks similar to The Bancorp, Inc. (NASDAQ:TBBK). We will take a look at iTeos Therapeutics, Inc. (NASDAQ:ITOS), Seabridge Gold, Inc. (NYSE:SA), Playa Hotels & Resorts N.V. (NASDAQ:PLYA), National HealthCare Corporation (NYSE:NHC), Ribbon Communications Inc. (NASDAQ:RBBN), Oasis Petroleum Inc. (NYSE:OAS), and Orion Engineered Carbons SA (NYSE:OEC). This group of stocks' market valuations match TBBK's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ITOS,12,246149,-3 SA,8,96749,-1 PLYA,26,348138,3 NHC,6,56897,-3 RBBN,15,51556,5 OAS,17,173658,3 OEC,19,186263,0 Average,14.7,165630,0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $101 million in TBBK's case. Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSE:NHC) is the least popular one with only 6 bullish hedge fund positions. The Bancorp, Inc. (NASDAQ:TBBK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBBK is 63.4. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately TBBK wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TBBK were disappointed as the stock returned 5.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.