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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards BankFinancial Corporation (NASDAQ:BFIN).
Is BFIN stock a buy? BankFinancial Corporation (NASDAQ:BFIN) shareholders have witnessed an increase in hedge fund sentiment recently. BankFinancial Corporation (NASDAQ:BFIN) was in 4 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. Our calculations also showed that BFIN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Phil Stone of Fourthstone LLC
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. Now we're going to review the recent hedge fund action regarding BankFinancial Corporation (NASDAQ:BFIN).
Do Hedge Funds Think BFIN Is A Good Stock To Buy Now?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in BFIN 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.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the most valuable position in BankFinancial Corporation (NASDAQ:BFIN), worth close to $10.6 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism consist of John Overdeck and David Siegel's Two Sigma Advisors, Phil Stone's Fourthstone LLC and . In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to BankFinancial Corporation (NASDAQ:BFIN), around 0.09% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to BFIN.
As one would reasonably expect, specific money managers have jumped into BankFinancial Corporation (NASDAQ:BFIN) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in BankFinancial Corporation (NASDAQ:BFIN). Arrowstreet Capital had $0.7 million invested in the company at the end of the quarter. Phil Stone's Fourthstone LLC also initiated a $0.2 million position during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as BankFinancial Corporation (NASDAQ:BFIN) but similarly valued. These stocks are Borr Drilling Limited (NYSE:BORR), Lee Enterprises, Incorporated (NASDAQ:LEE), Ardmore Shipping Corp (NYSE:ASC), Champions Oncology, Inc. (NASDAQ:CSBR), Dyadic International, Inc. (NASDAQ:DYAI), X4 Pharmaceuticals, Inc. (NASDAQ:XFOR), and First Community Corporation (NASDAQ:FCCO). All of these stocks' market caps are closest to BFIN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BORR,6,3469,3 LEE,3,17557,-3 ASC,7,16255,-4 CSBR,2,5737,-1 DYAI,4,2901,-1 XFOR,11,55792,4 FCCO,2,5481,0 Average,5,15313,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $12 million in BFIN's case. X4 Pharmaceuticals, Inc. (NASDAQ:XFOR) is the most popular stock in this table. On the other hand Champions Oncology, Inc. (NASDAQ:CSBR) is the least popular one with only 2 bullish hedge fund positions. BankFinancial Corporation (NASDAQ:BFIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BFIN is 34.3. 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 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on BFIN as the stock returned 9.1% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.