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Hedge Funds Have Never Been More Bullish On First Bancorp (FBNC)

Reymerlyn Martin

Does First Bancorp (NASDAQ:FBNC) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

First Bancorp (NASDAQ:FBNC) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of March. At the end of this article we will also compare FBNC to other stocks including AtriCure Inc. (NASDAQ:ATRC), Northern Oil & Gas, Inc. (NYSEAMEX:NOG), and Despegar.com, Corp. (NYSE:DESP) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CITADEL INVESTMENT GROUP

Let's take a glance at the key hedge fund action regarding First Bancorp (NASDAQ:FBNC).

Hedge fund activity in First Bancorp (NASDAQ:FBNC)

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FBNC over the last 15 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

FBNC_jun2019

Among these funds, Mendon Capital Advisors held the most valuable stake in First Bancorp (NASDAQ:FBNC), which was worth $27.6 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $22.6 million worth of shares. Moreover, Millennium Management, Forest Hill Capital, and Castine Capital Management were also bullish on First Bancorp (NASDAQ:FBNC), allocating a large percentage of their portfolios to this stock.

Since First Bancorp (NASDAQ:FBNC) has experienced declining sentiment from the smart money, logic holds that there exists a select few fund managers that decided to sell off their positions entirely last quarter. It's worth mentioning that Lawrence Seidman's Seidman Investment Partnership dumped the largest position of all the hedgies followed by Insider Monkey, totaling about $6.4 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund dropped about $0.1 million worth. These moves are intriguing to say the least, 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 - not necessarily in the same industry as First Bancorp (NASDAQ:FBNC) but similarly valued. These stocks are AtriCure Inc. (NASDAQ:ATRC), Northern Oil & Gas, Inc. (NYSEAMEX:NOG), Despegar.com, Corp. (NYSE:DESP), and Veracyte Inc (NASDAQ:VCYT). This group of stocks' market values resemble FBNC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATRC,25,123086,3 NOG,20,141448,4 DESP,15,226527,-4 VCYT,22,130377,5 Average,20.5,155360,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $155 million. That figure was $98 million in FBNC's case. AtriCure Inc. (NASDAQ:ATRC) is the most popular stock in this table. On the other hand Despegar.com, Corp. (NYSE:DESP) is the least popular one with only 15 bullish hedge fund positions. First Bancorp (NASDAQ:FBNC) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on FBNC, though not to the same extent, as the stock returned 4.7% during the same time frame and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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