Hedge Funds Are Souring On The First Bancshares, Inc. (FBMS)
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The First Bancshares, Inc. (MS) (NASDAQ:FBMS).
Is The First Bancshares, Inc. (MS) (NASDAQ:FBMS) a worthy investment right now? Hedge funds are reducing their bets on the stock. The number of bullish hedge fund positions shrunk by 1 in recent months. Our calculations also showed that FBMS 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). FBMS was in 5 hedge funds' portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with FBMS holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are assumed to be worthless, old investment tools of the past. While there are over 8000 funds in operation at the moment, Our experts look at the elite of this club, around 850 funds. It is estimated that this group of investors orchestrate bulk of the hedge fund industry's total capital, and by monitoring their highest performing picks, Insider Monkey has come up with several investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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Jim Simons of Renaissance Technologies[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a gander at the recent hedge fund action surrounding The First Bancshares, Inc. (MS) (NASDAQ:FBMS).
Hedge fund activity in The First Bancshares, Inc. (MS) (NASDAQ:FBMS)
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in FBMS 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.
Of the funds tracked by Insider Monkey, Anton Schutz's Mendon Capital Advisors has the biggest position in The First Bancshares, Inc. (MS) (NASDAQ:FBMS), worth close to $9 million, comprising 4.4% of its total 13F portfolio. The second largest stake is held by Castine Capital Management, managed by Paul Magidson, Jonathan Cohen. And Ostrom Enders, which holds a $4.8 million position; 2.7% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions consist of Ken Griffin's Citadel Investment Group, Phil Stone's Fourthstone LLC and Renaissance Technologies. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to The First Bancshares, Inc. (MS) (NASDAQ:FBMS), around 4.42% of its 13F portfolio. Castine Capital Management is also relatively very bullish on the stock, earmarking 2.65 percent of its 13F equity portfolio to FBMS.
Because The First Bancshares, Inc. (MS) (NASDAQ:FBMS) has witnessed a decline in interest from hedge fund managers, we can see that there exists a select few hedgies that slashed their positions entirely heading into Q4. It's worth mentioning that Peter Muller's PDT Partners cut the biggest investment of the "upper crust" of funds watched by Insider Monkey, valued at about $0.2 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund cut about $0.2 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds heading into Q4.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as The First Bancshares, Inc. (MS) (NASDAQ:FBMS) but similarly valued. These stocks are Meridian Bioscience, Inc. (NASDAQ:VIVO), Universal Logistics Holdings, Inc. (NASDAQ:ULH), Designer Brands Inc. (NYSE:DBI), and Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX). This group of stocks' market values are similar to FBMS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VIVO,20,57229,3 ULH,8,15656,-3 DBI,21,28950,-1 CRNX,11,166354,-1 Average,15,67047,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $16 million in FBMS's case. Designer Brands Inc. (NYSE:DBI) is the most popular stock in this table. On the other hand Universal Logistics Holdings, Inc. (NASDAQ:ULH) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks The First Bancshares, Inc. (MS) (NASDAQ:FBMS) is even less popular than ULH. Hedge funds dodged a bullet by taking a bearish stance towards FBMS. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately FBMS wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FBMS investors were disappointed as the stock returned 11.7% during the second quarter (through the end of May) 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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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