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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Southern First Bancshares, Inc. (NASDAQ:SFST) based on that data.
Southern First Bancshares, Inc. (NASDAQ:SFST) was in 5 hedge funds' portfolios at the end of March. SFST shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 7 hedge funds in our database with SFST positions at the end of the previous quarter. Our calculations also showed that SFST 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 58 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.
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Israel Englander of Millennium Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a peek at the recent hedge fund action regarding Southern First Bancshares, Inc. (NASDAQ:SFST).
How are hedge funds trading Southern First Bancshares, Inc. (NASDAQ:SFST)?
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards SFST over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Castine Capital Management was the largest shareholder of Southern First Bancshares, Inc. (NASDAQ:SFST), with a stake worth $5.7 million reported as of the end of September. Trailing Castine Capital Management was Elizabeth Park Capital Management, which amassed a stake valued at $4.8 million. Renaissance Technologies, EJF Capital, and Citadel Investment Group 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 Elizabeth Park Capital Management allocated the biggest weight to Southern First Bancshares, Inc. (NASDAQ:SFST), around 3.64% of its 13F portfolio. Castine Capital Management is also relatively very bullish on the stock, setting aside 3.1 percent of its 13F equity portfolio to SFST.
Due to the fact that Southern First Bancshares, Inc. (NASDAQ:SFST) has witnessed falling interest from the smart money, we can see that there was a specific group of fund managers who were dropping their full holdings in the first quarter. Interestingly, Anton Schutz's Mendon Capital Advisors said goodbye to the largest position of all the hedgies tracked by Insider Monkey, worth an estimated $4.2 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund cut about $0.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Southern First Bancshares, Inc. (NASDAQ:SFST) but similarly valued. These stocks are Northwest Pipe Company (NASDAQ:NWPX), Aduro BioTech Inc (NASDAQ:ADRO), American Renal Associates Holdings, Inc (NYSE:ARA), and Fly Leasing Ltd (NYSE:FLY). This group of stocks' market caps are similar to SFST's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWPX,13,34829,0 ADRO,11,41439,2 ARA,6,124445,0 FLY,13,23610,-1 Average,10.75,56081,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $18 million in SFST's case. Northwest Pipe Company (NASDAQ:NWPX) is the most popular stock in this table. On the other hand American Renal Associates Holdings, Inc (NYSE:ARA) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Southern First Bancshares, Inc. (NASDAQ:SFST) is even less popular than ARA. Hedge funds dodged a bullet by taking a bearish stance towards SFST. 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 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately SFST wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); SFST investors were disappointed as the stock returned 2.4% during the second quarter (through the end of May) 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.