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Should I Buy Business First Bancshares, Inc. (BFST)?

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·5 min read
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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Business First Bancshares, Inc. (NASDAQ:BFST).

Business First Bancshares, Inc. (NASDAQ:BFST) has experienced an increase in activity from the world's largest hedge funds recently. Business First Bancshares, Inc. (NASDAQ:BFST) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. Our calculations also showed that BFST isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Emanuel J. Friedman
Emanuel J. Friedman

Emanuel Friedman of EJF Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 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. Keeping this in mind let's check out the new hedge fund action regarding Business First Bancshares, Inc. (NASDAQ:BFST).

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

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in BFST over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

The largest stake in Business First Bancshares, Inc. (NASDAQ:BFST) was held by EJF Capital, which reported holding $13.6 million worth of stock at the end of December. It was followed by Mendon Capital Advisors with a $2.9 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.

As industrywide interest jumped, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Business First Bancshares, Inc. (NASDAQ:BFST). Citadel Investment Group had $0.4 million invested in the company at the end of the quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Business First Bancshares, Inc. (NASDAQ:BFST) but similarly valued. We will take a look at Accelerate Diagnostics Inc (NASDAQ:AXDX), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), 22nd Century Group, Inc (NYSE:XXII), Preferred Apartment Communities Inc. (NYSE:APTS), Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), AXT Inc (NASDAQ:AXTI), and Gladstone Land Corporation (NASDAQ:LAND). This group of stocks' market valuations resemble BFST's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AXDX,12,25867,-1 DHIL,10,57519,-1 XXII,8,12329,2 APTS,7,7274,-4 ACBI,16,74579,2 AXTI,11,36748,4 LAND,6,7103,-5 Average,10,31631,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $17 million in BFST's case. Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) is the most popular stock in this table. On the other hand Gladstone Land Corporation (NASDAQ:LAND) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Business First Bancshares, Inc. (NASDAQ:BFST) is even less popular than LAND. Our overall hedge fund sentiment score for BFST is 24. 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. Hedge funds dodged a bullet by taking a bearish stance towards BFST. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market again by 3.3 percentage points. Unfortunately BFST wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); BFST investors were disappointed as the stock returned -1.9% since the end of the first quarter (through 6/11) 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 most of these stocks already outperformed the market since 2019.

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

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