There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze First Bancorp (NASDAQ:FBNC).
Hedge fund interest in First Bancorp (NASDAQ:FBNC) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Kadant Inc. (NYSE:KAI), NovaGold Resources Inc. (NYSEAMEX:NG), and TeleTech Holdings, Inc. (NASDAQ:TTEC) to gather more data points.
According to most market participants, hedge funds are seen as slow, old financial vehicles of years past. While there are over 8,000 funds trading at present, Our researchers choose to focus on the aristocrats of this group, about 700 funds. It is estimated that this group of investors oversee the majority of the hedge fund industry's total capital, and by monitoring their matchless equity investments, Insider Monkey has identified numerous investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We're going to analyze the latest hedge fund action encompassing First Bancorp (NASDAQ:FBNC).
Hedge fund activity in First Bancorp (NASDAQ:FBNC)
At Q3's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in FBNC heading into this year. With the smart money's capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Mendon Capital Advisors was the largest shareholder of First Bancorp (NASDAQ:FBNC), with a stake worth $38.3 million reported as of the end of September. Trailing Mendon Capital Advisors was Renaissance Technologies, which amassed a stake valued at $26.8 million. Seidman Investment Partnership, Millennium Management, and Forest Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Since First Bancorp (NASDAQ:FBNC) has faced falling interest from the smart money, logic holds that there lies a certain "tier" of hedgies that slashed their full holdings last quarter. Interestingly, Roger Ibbotson's Zebra Capital Management sold off the biggest stake of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $0.6 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also said goodbye to its stock, about $0.5 million worth. These moves are intriguing to say the least, 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 similar to First Bancorp (NASDAQ:FBNC). We will take a look at Kadant Inc. (NYSE:KAI), NovaGold Resources Inc. (NYSEAMEX:NG), TeleTech Holdings, Inc. (NASDAQ:TTEC), and Vanda Pharmaceuticals Inc. (NASDAQ:VNDA). This group of stocks' market caps match FBNC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KAI,14,100315,0 NG,13,178655,0 TTEC,14,20335,2 VNDA,20,357102,0 Average,15.25,164102,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $133 million in FBNC's case. Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) is the most popular stock in this table. On the other hand NovaGold Resources Inc. (NYSEAMEX:NG) is the least popular one with only 13 bullish hedge fund positions. First Bancorp (NASDAQ:FBNC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard VNDA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.