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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Meridian Bancorp, Inc. (NASDAQ:EBSB), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Meridian Bancorp, Inc. (NASDAQ:EBSB) has experienced an increase in hedge fund interest recently. EBSB was in 15 hedge funds' portfolios at the end of the first quarter of 2019. There were 10 hedge funds in our database with EBSB positions at the end of the previous quarter. Our calculations also showed that EBSB isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's take a look at the recent hedge fund action regarding Meridian Bancorp, Inc. (NASDAQ:EBSB).
What have hedge funds been doing with Meridian Bancorp, Inc. (NASDAQ:EBSB)?
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in EBSB over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Meridian Bancorp, Inc. (NASDAQ:EBSB), with a stake worth $32.2 million reported as of the end of March. Trailing Renaissance Technologies was Impax Asset Management, which amassed a stake valued at $21.1 million. D E Shaw, Castine Capital Management, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key hedge funds were leading the bulls' herd. Castine Capital Management, managed by Paul Magidson, Jonathan Cohen. And Ostrom Enders, established the largest position in Meridian Bancorp, Inc. (NASDAQ:EBSB). Castine Capital Management had $5.2 million invested in the company at the end of the quarter. Bain Capital's Brookside Capital also made a $1.8 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding's Winton Capital Management, Michael Platt and William Reeves's BlueCrest Capital Mgmt., and Roger Ibbotson's Zebra Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Meridian Bancorp, Inc. (NASDAQ:EBSB) but similarly valued. We will take a look at Addus Homecare Corporation (NASDAQ:ADUS), ANI Pharmaceuticals Inc (NASDAQ:ANIP), Kornit Digital Ltd. (NASDAQ:KRNT), and Boot Barn Holdings Inc (NYSE:BOOT). All of these stocks' market caps are closest to EBSB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADUS,14,73546,0 ANIP,17,82176,4 KRNT,10,42618,-4 BOOT,23,154459,4 Average,16,88200,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $76 million in EBSB's case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand Kornit Digital Ltd. (NASDAQ:KRNT) is the least popular one with only 10 bullish hedge fund positions. Meridian Bancorp, Inc. (NASDAQ:EBSB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on EBSB as the stock returned 13.6% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
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