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In this article we will check out the progression of hedge fund sentiment towards Chemung Financial Corp. (NASDAQ:CHMG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Chemung Financial Corp. (NASDAQ:CHMG) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Green Plains Partners LP (NASDAQ:GPP), MVB Financial Corp. (NASDAQ:MVBF), and SunOpta, Inc. (NASDAQ:STKL) to gather more data points. Our calculations also showed that CHMG 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 tons of metrics stock market investors employ to appraise stocks. A pair of the most useful metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can beat the market by a very impressive amount (see the details here).
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Matthew Lindenbaum of Basswood Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a peek at the latest hedge fund action encompassing Chemung Financial Corp. (NASDAQ:CHMG).
What have hedge funds been doing with Chemung Financial Corp. (NASDAQ:CHMG)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in CHMG a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Basswood Capital was the largest shareholder of Chemung Financial Corp. (NASDAQ:CHMG), with a stake worth $5.4 million reported as of the end of September. Trailing Basswood Capital was Renaissance Technologies, which amassed a stake valued at $2.6 million. Royce & Associates was 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 Basswood Capital allocated the biggest weight to Chemung Financial Corp. (NASDAQ:CHMG), around 0.64% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to CHMG.
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 - not necessarily in the same industry as Chemung Financial Corp. (NASDAQ:CHMG) but similarly valued. These stocks are Green Plains Partners LP (NASDAQ:GPP), MVB Financial Corp. (NASDAQ:MVBF), SunOpta, Inc. (NASDAQ:STKL), and Nature's Sunshine Prod. (NASDAQ:NATR). All of these stocks' market caps resemble CHMG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GPP,2,15954,1 MVBF,7,18486,3 STKL,12,59990,-1 NATR,6,65608,0 Average,6.75,40010,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $9 million in CHMG's case. SunOpta, Inc. (NASDAQ:STKL) is the most popular stock in this table. On the other hand Green Plains Partners LP (NASDAQ:GPP) is the least popular one with only 2 bullish hedge fund positions. Chemung Financial Corp. (NASDAQ:CHMG) 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 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately CHMG wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CHMG investors were disappointed as the stock returned -20.9% 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.