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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards BCB Bancorp, Inc. (NASDAQ:BCBP).
Hedge fund interest in BCB Bancorp, Inc. (NASDAQ:BCBP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BCBP to other stocks including Arlo Technologies, Inc. (NYSE:ARLO), Kaleido BioSciences, Inc. (NASDAQ:KLDO), and Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Michael Price of MFP Investors[/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 analyze the new hedge fund action regarding BCB Bancorp, Inc. (NASDAQ:BCBP).
How are hedge funds trading BCB Bancorp, Inc. (NASDAQ:BCBP)?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BCBP over the last 18 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, MFP Investors, managed by Michael Price, holds the biggest position in BCB Bancorp, Inc. (NASDAQ:BCBP). MFP Investors has a $10.9 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund is Renaissance Technologies, holding a $5.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Roger Ibbotson's Zebra Capital Management, David Harding's Winton Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to BCB Bancorp, Inc. (NASDAQ:BCBP), around 2.2% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.65 percent of its 13F equity portfolio to BCBP.
Due to the fact that BCB Bancorp, Inc. (NASDAQ:BCBP) has faced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that slashed their entire stakes by the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the biggest position of all the hedgies tracked by Insider Monkey, worth close to $0.6 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also said goodbye to its stock, about $0.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to BCB Bancorp, Inc. (NASDAQ:BCBP). These stocks are Arlo Technologies, Inc. (NYSE:ARLO), Kaleido BioSciences, Inc. (NASDAQ:KLDO), Spirit of Texas Bancshares, Inc. (NASDAQ:STXB), and Emerald Holding, Inc. (NYSE:EEX). All of these stocks' market caps resemble BCBP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARLO,10,15415,1 KLDO,3,5030,1 STXB,4,9654,0 EEX,11,5613,1 Average,7,8928,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $18 million in BCBP's case. Emerald Holding, Inc. (NYSE:EEX) is the most popular stock in this table. On the other hand Kaleido BioSciences, Inc. (NASDAQ:KLDO) is the least popular one with only 3 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately BCBP wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BCBP investors were disappointed as the stock returned -8.6% during the second quarter 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.