Is FVCBankcorp, Inc. (FVCB) A Good Stock To Buy?
We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of FVCBankcorp, Inc. (NASDAQ:FVCB) based on that data.
FVCBankcorp, Inc. (NASDAQ:FVCB) was in 3 hedge funds' portfolios at the end of the first quarter of 2020. FVCB shareholders have witnessed a decrease in hedge fund interest lately. There were 4 hedge funds in our database with FVCB positions at the end of the previous quarter. Our calculations also showed that FVCB isn't among the 30 most popular stocks among hedge funds (click for Q1 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 44 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_746893" align="aligncenter" width="400"]
Paul Marshall of Marshall Wace[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to analyze the key hedge fund action surrounding FVCBankcorp, Inc. (NASDAQ:FVCB).
Hedge fund activity in FVCBankcorp, Inc. (NASDAQ:FVCB)
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in FVCB a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Fred Cummings's Elizabeth Park Capital Management has the number one position in FVCBankcorp, Inc. (NASDAQ:FVCB), worth close to $7.9 million, corresponding to 6% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to FVCBankcorp, Inc. (NASDAQ:FVCB), around 6% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.0006 percent of its 13F equity portfolio to FVCB.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified FVCB as a viable investment and initiated a position in the stock.
Let's now review hedge fund activity in other stocks similar to FVCBankcorp, Inc. (NASDAQ:FVCB). We will take a look at TCR2 Therapeutics Inc. (NASDAQ:TCRR), Ames National Corporation (NASDAQ:ATLO), BCB Bancorp, Inc. (NJ) (NASDAQ:BCBP), and Arlo Technologies, Inc. (NYSE:ARLO). This group of stocks' market caps resemble FVCB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCRR,7,18104,3 ATLO,4,16527,1 BCBP,6,17574,0 ARLO,10,15415,1 Average,6.75,16905,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $9 million in FVCB's case. Arlo Technologies, Inc. (NYSE:ARLO) is the most popular stock in this table. On the other hand Ames National Corporation (NASDAQ:ATLO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks FVCBankcorp, Inc. (NASDAQ:FVCB) is even less popular than ATLO. Hedge funds dodged a bullet by taking a bearish stance towards FVCB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately FVCB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FVCB investors were disappointed as the stock returned -17% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
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