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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about AmeriServ Financial, Inc. (NASDAQ:ASRV).
AmeriServ Financial, Inc. (NASDAQ:ASRV) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of September. At the end of this article we will also compare ASRV to other stocks including Spark Networks SE (NYSE:LOV), Computer Task Group, Incorporated (NASDAQ:CTG), and CLPS Incorporation (NASDAQ:CLPS) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
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Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now we're going to take a gander at the key hedge fund action encompassing AmeriServ Financial, Inc. (NASDAQ:ASRV).
What have hedge funds been doing with AmeriServ Financial, Inc. (NASDAQ:ASRV)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 2 hedge funds with a bullish position in ASRV 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.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in AmeriServ Financial, Inc. (NASDAQ:ASRV), worth close to $3.2 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Tontine Asset Management, led by Jeffrey Gendell, holding a $2.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish consist of David P. Cohen's Minerva Advisors, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and . In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to AmeriServ Financial, Inc. (NASDAQ:ASRV), around 0.34% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to ASRV.
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 similar to AmeriServ Financial, Inc. (NASDAQ:ASRV). These stocks are Spark Networks SE (NYSE:LOV), Computer Task Group, Incorporated (NASDAQ:CTG), CLPS Incorporation (NASDAQ:CLPS), and Nicholas Financial, Inc. (NASDAQ:NICK). This group of stocks' market caps match ASRV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LOV,6,15127,3 CTG,7,13528,-2 CLPS,2,1260,1 NICK,2,22051,0 Average,4.25,12992,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $6 million in ASRV's case. Computer Task Group, Incorporated (NASDAQ:CTG) is the most popular stock in this table. On the other hand CLPS Incorporation (NASDAQ:CLPS) is the least popular one with only 2 bullish hedge fund positions. AmeriServ Financial, Inc. (NASDAQ:ASRV) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ASRV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ASRV investors were disappointed as the stock returned 1.8% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.