The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded MidWestOne Financial Group, Inc. (NASDAQ:MOFG) based on those filings.
MidWestOne Financial Group, Inc. (NASDAQ:MOFG) shareholders have witnessed an increase in hedge fund interest recently. MOFG was in 9 hedge funds' portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with MOFG positions at the end of the previous quarter. Our calculations also showed that MOFG 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.
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.
[caption id="attachment_845793" align="aligncenter" width="392"] Peter Rathjens of Arrowstreet Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a gander at the fresh hedge fund action surrounding MidWestOne Financial Group, Inc. (NASDAQ:MOFG).
Hedge fund activity in MidWestOne Financial Group, Inc. (NASDAQ:MOFG)
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in MOFG a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of MidWestOne Financial Group, Inc. (NASDAQ:MOFG), with a stake worth $3.8 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $1.8 million. EJF Capital, Citadel Investment Group, and Two Sigma Advisors 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 EJF Capital allocated the biggest weight to MidWestOne Financial Group, Inc. (NASDAQ:MOFG), around 0.35% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to MOFG.
Consequently, some big names have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in MidWestOne Financial Group, Inc. (NASDAQ:MOFG). Marshall Wace LLP had $0.6 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as MidWestOne Financial Group, Inc. (NASDAQ:MOFG) but similarly valued. We will take a look at Chesapeake Energy Corporation (NYSE:CHK), Signet Jewelers Limited (NYSE:SIG), Establishment Labs Holdings Inc. (NASDAQ:ESTA), and Capital City Bank Group, Inc. (NASDAQ:CCBG). All of these stocks' market caps are closest to MOFG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHK,15,12034,-4 SIG,25,72355,3 ESTA,14,64923,4 CCBG,3,6586,-2 Average,14.25,38975,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $11 million in MOFG's case. Signet Jewelers Limited (NYSE:SIG) is the most popular stock in this table. On the other hand Capital City Bank Group, Inc. (NASDAQ:CCBG) is the least popular one with only 3 bullish hedge fund positions. MidWestOne Financial Group, Inc. (NASDAQ:MOFG) 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately MOFG wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MOFG investors were disappointed as the stock returned -4.3% 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.