At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Bank of Marin Bancorp (NASDAQ:BMRC) was in 6 hedge funds' portfolios at the end of the fourth quarter of 2018. BMRC shareholders have witnessed a decrease in activity from the world's largest hedge funds of late. There were 7 hedge funds in our database with BMRC holdings at the end of the previous quarter. Our calculations also showed that BMRC isn't among the 30 most popular stocks among hedge funds.
In the eyes of most market participants, hedge funds are viewed as underperforming, old investment tools of yesteryear. While there are over 8000 funds trading at the moment, We hone in on the crème de la crème of this club, approximately 750 funds. These money managers manage bulk of the hedge fund industry's total asset base, and by keeping an eye on their top investments, Insider Monkey has unearthed numerous investment strategies that have historically outrun the broader indices. Insider Monkey's flagship hedge fund strategy outrun the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let's check out the fresh hedge fund action regarding Bank of Marin Bancorp (NASDAQ:BMRC).
How have hedgies been trading Bank of Marin Bancorp (NASDAQ:BMRC)?
At the end of the fourth quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in BMRC over the last 14 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Bank of Marin Bancorp (NASDAQ:BMRC), which was worth $9.9 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $4.3 million worth of shares. Moreover, Azora Capital, AQR Capital Management, and Two Sigma Advisors were also bullish on Bank of Marin Bancorp (NASDAQ:BMRC), allocating a large percentage of their portfolios to this stock.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Gillson Capital. 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 700+ hedge funds tracked by Insider Monkey identified BMRC as a viable investment and initiated a position in the stock.
Let's also examine hedge fund activity in other stocks similar to Bank of Marin Bancorp (NASDAQ:BMRC). We will take a look at Preferred Apartment Communities Inc. (NYSEAMEX:APTS), Assembly Biosciences Inc (NASDAQ:ASMB), Dynavax Technologies Corporation (NASDAQ:DVAX), and W&T Offshore, Inc. (NYSE:WTI). All of these stocks' market caps resemble BMRC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APTS,2,547,-1 ASMB,18,148368,-2 DVAX,18,137226,-1 WTI,21,56548,4 Average,14.75,85672,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $20 million in BMRC's case. W&T Offshore, Inc. (NYSE:WTI) is the most popular stock in this table. On the other hand Preferred Apartment Communities Inc. (NYSEAMEX:APTS) is the least popular one with only 2 bullish hedge fund positions. Bank of Marin Bancorp (NASDAQ:BMRC) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately BMRC wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); BMRC investors were disappointed as the stock returned 3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.