Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Citizens & Northern Corporation (NASDAQ:CZNC).
Hedge fund interest in Citizens & Northern Corporation (NASDAQ:CZNC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 TCR2 Therapeutics Inc. (NASDAQ:TCRR), Park Aerospace Corp. (NYSE:PKE), and American Public Education, Inc. (NASDAQ:APEI) to gather more data points. Our calculations also showed that CZNC isn't among the 30 most popular stocks among hedge funds.
At the moment there are numerous metrics market participants can use to analyze their holdings. Some of the best metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the broader indices by a healthy margin (see the details here).
[caption id="attachment_26073" align="aligncenter" width="450"] Jim Simons founder of RENAISSANCE TECHNOLOGIES[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a look at the fresh hedge fund action surrounding Citizens & Northern Corporation (NASDAQ:CZNC).
How are hedge funds trading Citizens & Northern Corporation (NASDAQ:CZNC)?
Heading into the fourth quarter of 2019, a total of 2 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CZNC over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Citizens & Northern Corporation (NASDAQ:CZNC) was held by Renaissance Technologies, which reported holding $5.6 million worth of stock at the end of September. It was followed by Minerva Advisors with a $1.1 million position.
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 Citizens & Northern Corporation (NASDAQ:CZNC) but similarly valued. We will take a look at TCR2 Therapeutics Inc. (NASDAQ:TCRR), Park Aerospace Corp. (NYSE:PKE), American Public Education, Inc. (NASDAQ:APEI), and Just Energy Group, Inc. (NYSE:JE). All of these stocks' market caps match CZNC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCRR,2,31761,-2 PKE,12,82109,3 APEI,14,56912,1 JE,8,32204,-5 Average,9,50747,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $7 million in CZNC's case. American Public Education, Inc. (NASDAQ:APEI) is the most popular stock in this table. On the other hand TCR2 Therapeutics Inc. (NASDAQ:TCRR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Citizens & Northern Corporation (NASDAQ:CZNC) is even less popular than TCRR. Hedge funds dodged a bullet by taking a bearish stance towards CZNC. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately CZNC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CZNC investors were disappointed as the stock returned 2.1% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.