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"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards BCB Bancorp, Inc. (NASDAQ:BCBP).
Is BCB Bancorp, Inc. (NASDAQ:BCBP) a sound investment today? Hedge funds are betting on the stock. The number of long hedge fund positions moved up by 1 in recent months. Our calculations also showed that BCBP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BCBP was in 3 hedge funds' portfolios at the end of September. There were 2 hedge funds in our database with BCBP holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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Matthew Hulsizer of PEAK6 Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's take a glance at the key hedge fund action regarding BCB Bancorp, Inc. (NASDAQ:BCBP).
What have hedge funds been doing with BCB Bancorp, Inc. (NASDAQ:BCBP)?
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in BCBP over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in BCB Bancorp, Inc. (NASDAQ:BCBP), which was worth $6.2 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $0.5 million worth of shares. Millennium Management was 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 Renaissance Technologies allocated the biggest weight to BCB Bancorp, Inc. (NASDAQ:BCBP), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.0012 percent of its 13F equity portfolio to BCBP.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in BCB Bancorp, Inc. (NASDAQ:BCBP). Arrowstreet Capital had $0.5 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks similar to BCB Bancorp, Inc. (NASDAQ:BCBP). We will take a look at THL Credit, Inc. (NASDAQ:TCRD), RTI Surgical Holdings, Inc. (NASDAQ:RTIX), DHI Group Inc. (NYSE:DHX), and Maui Land & Pineapple Company, Inc. (NYSE:MLP). This group of stocks' market valuations resemble BCBP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCRD,6,25124,1 RTIX,14,24907,2 DHX,17,57742,1 MLP,2,6750,0 Average,9.75,28631,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $7 million in BCBP's case. DHI Group Inc. (NYSE:DHX) is the most popular stock in this table. On the other hand Maui Land & Pineapple Company, Inc. (NYSE:MLP) is the least popular one with only 2 bullish hedge fund positions. BCB Bancorp, Inc. (NASDAQ:BCBP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on BCBP, though not to the same extent, as the stock returned 6.6% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.