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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The First Bancshares, Inc. (MS) (NASDAQ:FBMS).
Is FBMS a good stock to buy now? The First Bancshares, Inc. (MS) (NASDAQ:FBMS) was in 7 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. FBMS investors should pay attention to a decrease in hedge fund interest lately. There were 8 hedge funds in our database with FBMS holdings at the end of June. Our calculations also showed that FBMS 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.
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. 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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 let's analyze the latest hedge fund action regarding The First Bancshares, Inc. (MS) (NASDAQ:FBMS).
What does smart money think about The First Bancshares, Inc. (MS) (NASDAQ:FBMS)?
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FBMS over the last 21 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Mendon Capital Advisors was the largest shareholder of The First Bancshares, Inc. (MS) (NASDAQ:FBMS), with a stake worth $8.7 million reported as of the end of September. Trailing Mendon Capital Advisors was JCSD Capital, which amassed a stake valued at $4.4 million. Fourthstone LLC, EJF Capital, and Arrowstreet 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 JCSD Capital allocated the biggest weight to The First Bancshares, Inc. (MS) (NASDAQ:FBMS), around 5.35% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, setting aside 5.09 percent of its 13F equity portfolio to FBMS.
Since The First Bancshares, Inc. (MS) (NASDAQ:FBMS) has witnessed declining sentiment from the aggregate hedge fund industry, it's easy to see that there were a few hedgies that elected to cut their positions entirely in the third quarter. At the top of the heap, Paul Magidson, Jonathan Cohen. And Ostrom Enders's Castine Capital Management sold off the biggest position of all the hedgies monitored by Insider Monkey, totaling close to $5.1 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund said goodbye to about $1.6 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to The First Bancshares, Inc. (MS) (NASDAQ:FBMS). We will take a look at Antares Pharma Inc (NASDAQ:ATRS), Geopark Ltd (NYSE:GPRK), Global Partners LP (NYSE:GLP), Despegar.com, Corp. (NYSE:DESP), Cue Biopharma, Inc. (NASDAQ:CUE), NetSTREIT Corp. (NYSE:NTST), and Horizon Bancorp (NASDAQ:HBNC). This group of stocks' market caps resemble FBMS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATRS,18,18458,-2 GPRK,12,52867,-1 GLP,2,5605,0 DESP,17,98334,-1 CUE,15,155293,-3 NTST,10,92763,10 HBNC,12,16845,-2 Average,12.3,62881,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $20 million in FBMS's case. Antares Pharma Inc (NASDAQ:ATRS) is the most popular stock in this table. On the other hand Global Partners LP (NYSE:GLP) is the least popular one with only 2 bullish hedge fund positions. The First Bancshares, Inc. (MS) (NASDAQ:FBMS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FBMS is 45.9. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on FBMS as the stock returned 39.2% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.