Is MutualFirst Financial, Inc. (NASDAQ:MFSF) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
MutualFirst Financial, Inc. (NASDAQ:MFSF) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Reliant Bancorp, Inc. (NASDAQ:RBNC), Kindred Biosciences Inc (NASDAQ:KIN), and Provention Bio, Inc. (NASDAQ:PRVB) to gather more data points. Our calculations also showed that MFSF isn't among the 30 most popular stocks among hedge funds.
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 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 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27209" align="aligncenter" width="444"] Jim Simons of Renaissance Technologies[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to check out the key hedge fund action encompassing MutualFirst Financial, Inc. (NASDAQ:MFSF).
Hedge fund activity in MutualFirst Financial, Inc. (NASDAQ:MFSF)
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MFSF over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Frederick DiSanto's Ancora Advisors has the most valuable position in MutualFirst Financial, Inc. (NASDAQ:MFSF), worth close to $18 million, amounting to 0.8% of its total 13F portfolio. On Ancora Advisors's heels is Renaissance Technologies, holding a $8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to MutualFirst Financial, Inc. (NASDAQ:MFSF), around 0.79% of its portfolio. Minerva Advisors is also relatively very bullish on the stock, dishing out 0.52 percent of its 13F equity portfolio to MFSF.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as MutualFirst Financial, Inc. (NASDAQ:MFSF) but similarly valued. We will take a look at Reliant Bancorp, Inc. (NASDAQ:RBNC), Kindred Biosciences Inc (NASDAQ:KIN), Provention Bio, Inc. (NASDAQ:PRVB), and Cedar Realty Trust Inc (NYSE:CDR). This group of stocks' market values resemble MFSF's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RBNC,1,432,0 KIN,7,79753,-2 PRVB,8,15344,5 CDR,10,16965,-3 Average,6.5,28124,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $27 million in MFSF's case. Cedar Realty Trust Inc (NYSE:CDR) is the most popular stock in this table. On the other hand Reliant Bancorp, Inc. (NASDAQ:RBNC) is the least popular one with only 1 bullish hedge fund positions. MutualFirst Financial, Inc. (NASDAQ:MFSF) 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 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on MFSF as the stock returned 24.8% during Q4 (through 11/22) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.