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In this article we will take a look at whether hedge funds think Southern First Bancshares, Inc. (NASDAQ:SFST) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Southern First Bancshares, Inc. (NASDAQ:SFST) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that SFST 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). At the end of this article we will also compare SFST to other stocks including Hurco Companies, Inc. (NASDAQ:HURC), RCI Hospitality Holdings, Inc. (NASDAQ:RICK), and CompX International Inc. (NYSE:CIX) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are several signals shareholders use to evaluate their stock investments. Two of the less utilized signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outclass their index-focused peers by a superb margin (see the details here).
Emanuel Friedman of EJF Capital
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 15 best blue chip stocks 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. With all of this in mind we're going to take a peek at the key hedge fund action surrounding Southern First Bancshares, Inc. (NASDAQ:SFST).
What have hedge funds been doing with Southern First Bancshares, Inc. (NASDAQ:SFST)?
At Q3's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SFST over the last 21 quarters. So, let's check out 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, Emanuel J. Friedman's EJF Capital has the largest position in Southern First Bancshares, Inc. (NASDAQ:SFST), worth close to $4.1 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $3.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions comprise Fred Cummings's Elizabeth Park Capital Management, Anton Schutz's Mendon Capital Advisors and Mario Gabelli's GAMCO Investors. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to Southern First Bancshares, Inc. (NASDAQ:SFST), around 1.53% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to SFST.
Judging by the fact that Southern First Bancshares, Inc. (NASDAQ:SFST) has faced falling interest from the smart money, it's easy to see that there is a sect of money managers that decided to sell off their full holdings last quarter. Intriguingly, Paul Magidson, Jonathan Cohen. And Ostrom Enders's Castine Capital Management sold off the biggest stake of all the hedgies monitored by Insider Monkey, valued at close to $3.9 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $0.2 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Southern First Bancshares, Inc. (NASDAQ:SFST) but similarly valued. These stocks are Hurco Companies, Inc. (NASDAQ:HURC), RCI Hospitality Holdings, Inc. (NASDAQ:RICK), CompX International Inc. (NYSE:CIX), Perion Network Ltd (NASDAQ:PERI), Liquidia Corporation (NASDAQ:LQDA), Overseas Shipholding Group, Inc. (NYSE:OSG), and Flexsteel Industries, Inc. (NASDAQ:FLXS). This group of stocks' market values are closest to SFST's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HURC,4,28880,0 RICK,5,33418,-2 CIX,4,12036,0 PERI,8,28654,3 LQDA,10,25209,-6 OSG,11,39199,-1 FLXS,9,40282,-4 Average,7.3,29668,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $11 million in SFST's case. Overseas Shipholding Group, Inc. (NYSE:OSG) is the most popular stock in this table. On the other hand Hurco Companies, Inc. (NASDAQ:HURC) is the least popular one with only 4 bullish hedge fund positions. Southern First Bancshares, Inc. (NASDAQ:SFST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SFST is 45. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on SFST as the stock returned 36.4% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.