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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about ConnectOne Bancorp Inc (NASDAQ:CNOB) in this article.
Is CNOB a good stock to buy now? ConnectOne Bancorp Inc (NASDAQ:CNOB) has experienced a decrease in activity from the world's largest hedge funds lately. ConnectOne Bancorp Inc (NASDAQ:CNOB) was in 9 hedge funds' portfolios at the end of September. The all time high for this statistics is 15. Our calculations also showed that CNOB 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Keeping this in mind let's go over the fresh hedge fund action encompassing ConnectOne Bancorp Inc (NASDAQ:CNOB).
Do Hedge Funds Think CNOB Is A Good Stock To Buy Now?
At third quarter's end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the second quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in CNOB a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in ConnectOne Bancorp Inc (NASDAQ:CNOB), which was worth $10.6 million at the end of the third quarter. On the second spot was EJF Capital which amassed $4 million worth of shares. Seidman Investment Partnership, D E Shaw, and Two Sigma Advisors 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 Seidman Investment Partnership allocated the biggest weight to ConnectOne Bancorp Inc (NASDAQ:CNOB), around 2.71% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, earmarking 0.33 percent of its 13F equity portfolio to CNOB.
Judging by the fact that ConnectOne Bancorp Inc (NASDAQ:CNOB) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that slashed their full holdings last quarter. Interestingly, Paul Magidson, Jonathan Cohen. And Ostrom Enders's Castine Capital Management dropped the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling about $9 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dropped its stock, about $1.1 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let's now review hedge fund activity in other stocks similar to ConnectOne Bancorp Inc (NASDAQ:CNOB). These stocks are Trueblue Inc (NYSE:TBI), National Energy Services Reunited Corp. (NASDAQ:NESR), MarineMax, Inc. (NYSE:HZO), XBiotech Inc. (NASDAQ:XBIT), Independence Holding Company (NYSE:IHC), OneSpaWorld Holdings Limited (NASDAQ:OSW), and Green Plains Inc. (NASDAQ:GPRE). This group of stocks' market caps match CNOB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TBI,15,46144,1 NESR,8,26931,0 HZO,21,52688,0 XBIT,4,2598,0 IHC,5,26115,0 OSW,10,67325,-4 GPRE,17,156646,-3 Average,11.4,54064,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $20 million in CNOB's case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand XBiotech Inc. (NASDAQ:XBIT) is the least popular one with only 4 bullish hedge fund positions. ConnectOne Bancorp Inc (NASDAQ:CNOB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CNOB is 35.7. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CNOB as the stock returned 41.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.