In this article you are going to find out whether hedge funds think QCR Holdings, Inc. (NASDAQ:QCRH) is a good investment 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.
Is QCR Holdings, Inc. (NASDAQ:QCRH) a buy here? Investors who are in the know are getting less optimistic. The number of long hedge fund positions were trimmed by 1 lately. Our calculations also showed that QCRH 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.
To the average investor there are dozens of formulas stock traders can use to evaluate publicly traded companies. A couple of the less utilized formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outclass the S&P 500 by a very impressive margin (see the details here).
[caption id="attachment_843278" align="aligncenter" width="400"] Fred Cummings of Elizabeth Park 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. Keeping this in mind let's analyze the new hedge fund action encompassing QCR Holdings, Inc. (NASDAQ:QCRH).
What have hedge funds been doing with QCR Holdings, Inc. (NASDAQ:QCRH)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in QCRH over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in QCR Holdings, Inc. (NASDAQ:QCRH) was held by Renaissance Technologies, which reported holding $16.1 million worth of stock at the end of September. It was followed by Castine Capital Management with a $11.2 million position. Other investors bullish on the company included Elizabeth Park Capital Management, Citadel Investment Group, and Winton Capital Management. In terms of the portfolio weights assigned to each position Castine Capital Management allocated the biggest weight to QCR Holdings, Inc. (NASDAQ:QCRH), around 6.13% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, earmarking 3.82 percent of its 13F equity portfolio to QCRH.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Endicott Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified QCRH as a viable investment and initiated a position in the stock.
Let's now take a look at hedge fund activity in other stocks similar to QCR Holdings, Inc. (NASDAQ:QCRH). These stocks are Yintech Investment Holdings Limited (NASDAQ:YIN), Prothena Corporation plc (NASDAQ:PRTA), Midland States Bancorp, Inc. (NASDAQ:MSBI), and Boston Omaha Corporation (NASDAQ:BOMN). All of these stocks' market caps match QCRH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YIN,1,562,0 PRTA,20,214962,-3 MSBI,8,5655,-1 BOMN,5,185342,0 Average,8.5,101630,-1 [/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 $102 million. That figure was $35 million in QCRH's case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 1 bullish hedge fund positions. QCR Holdings, Inc. (NASDAQ:QCRH) 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately QCRH wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); QCRH investors were disappointed as the stock returned 11.8% 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.