The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Fourth quarter brought optimism to the markets and hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 37.4% through the end of November, vs. a gain of 27.5% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards MVB Financial Corp. (NASDAQ:MVBF), and what that likely means for the prospects of the company and its stock.
Is MVB Financial Corp. (NASDAQ:MVBF) worth your attention right now? The smart money is in a bullish mood. The number of long hedge fund bets rose by 1 recently. Our calculations also showed that MVBF isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MVBF was in 4 hedge funds' portfolios at the end of September. There were 3 hedge funds in our database with MVBF holdings at the end of the previous quarter. 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.
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 go over the new hedge fund action surrounding MVB Financial Corp. (NASDAQ:MVBF).
How are hedge funds trading MVB Financial Corp. (NASDAQ:MVBF)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MVBF 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, EJF Capital, managed by Emanuel J. Friedman, holds the largest position in MVB Financial Corp. (NASDAQ:MVBF). EJF Capital has a $22.4 million position in the stock, comprising 3.1% of its 13F portfolio. Sitting at the No. 2 spot is Tom Brown of Second Curve Capital, with a $2.1 million position; 1.3% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions encompass Jeffrey Gendell's Tontine Asset Management, Renaissance Technologies and . In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to MVB Financial Corp. (NASDAQ:MVBF), around 3.05% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, earmarking 1.29 percent of its 13F equity portfolio to MVBF.
Now, key money managers have been driving this bullishness. Renaissance Technologies, created the most outsized position in MVB Financial Corp. (NASDAQ:MVBF). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to MVB Financial Corp. (NASDAQ:MVBF). These stocks are Akoustis Technologies, Inc. (NASDAQ:AKTS), SeaSpine Holdings Corp (NASDAQ:SPNE), Marker Therapeutics, Inc. (NASDAQ:MRKR), and Iteris Inc (NYSE:ITI). This group of stocks' market valuations are closest to MVBF's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AKTS,6,4784,2 SPNE,7,14269,0 MRKR,9,20168,0 ITI,12,27224,-3 Average,8.5,16611,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $25 million in MVBF's case. Iteris Inc (NYSE:ITI) is the most popular stock in this table. On the other hand Akoustis Technologies, Inc. (NASDAQ:AKTS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks MVB Financial Corp. (NASDAQ:MVBF) is even less popular than AKTS. 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. A small number of hedge funds were also right about betting on MVBF, though not to the same extent, as the stock returned 7.7% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.