Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of First Bank (NASDAQ:FRBA).
Is First Bank (NASDAQ:FRBA) a bargain? The smart money was in a pessimistic mood. The number of long hedge fund positions retreated by 2 in recent months. First Bank (NASDAQ:FRBA) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 7. Our calculations also showed that FRBA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 7 hedge funds in our database with FRBA holdings at the end of December.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Price of MFP Investors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let's review the recent hedge fund action encompassing First Bank (NASDAQ:FRBA).
Do Hedge Funds Think FRBA Is A Good Stock To Buy Now?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the fourth quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in FRBA a year ago. So, let's see 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 First Bank (NASDAQ:FRBA), which was worth $2.6 million at the end of the fourth quarter. On the second spot was MFP Investors which amassed $2.4 million worth of shares. Tontine Asset Management, Fourthstone LLC, 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 Fourthstone LLC allocated the biggest weight to First Bank (NASDAQ:FRBA), around 0.7% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to FRBA.
Judging by the fact that First Bank (NASDAQ:FRBA) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of money managers that slashed their positions entirely by the end of the first quarter. Interestingly, David Harding's Winton Capital Management said goodbye to the biggest investment of the "upper crust" of funds watched by Insider Monkey, worth close to $0.3 million in stock, and Roger Ibbotson's Zebra Capital Management was right behind this move, as the fund dumped about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as First Bank (NASDAQ:FRBA) but similarly valued. We will take a look at Castlight Health Inc (NYSE:CSLT), Novan, Inc. (NASDAQ:NOVN), Sharps Compliance Corp. (NASDAQ:SMED), Parke Bancorp, Inc. (NASDAQ:PKBK), Eneti Inc. (NYSE:NETI), ZK International Group Co., Ltd. (NASDAQ:ZKIN), and Onconova Therapeutics, Inc. (NASDAQ:ONTX). All of these stocks' market caps are similar to FRBA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSLT,24,40849,12 NOVN,4,5028,3 SMED,9,19326,3 PKBK,3,10303,0 NETI,2,4073,0 ZKIN,3,1032,2 ONTX,10,8984,9 Average,7.9,12799,4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $8 million in FRBA's case. Castlight Health Inc (NYSE:CSLT) is the most popular stock in this table. On the other hand Eneti Inc. (NYSE:NETI) is the least popular one with only 2 bullish hedge fund positions. First Bank (NASDAQ:FRBA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FRBA is 31.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on FRBA, though not to the same extent, as the stock returned 10.4% since the end of Q1 (through June 18th) and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.