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Here is What Hedge Funds Think About Parke Bancorp, Inc. (PKBK)

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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Parke Bancorp, Inc. (NASDAQ:PKBK) based on that data.

Hedge fund interest in Parke Bancorp, Inc. (NASDAQ:PKBK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PKBK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Eneti Inc. (NYSE:NETI), ZK International Group Co., Ltd. (NASDAQ:ZKIN), and Onconova Therapeutics, Inc. (NASDAQ:ONTX) to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Matthew Lindenbaum Basswood Capital
Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to go over the fresh hedge fund action encompassing Parke Bancorp, Inc. (NASDAQ:PKBK).

Do Hedge Funds Think PKBK Is A Good Stock To Buy Now?

At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in PKBK a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Is PKBK A Good Stock To Buy?
Is PKBK A Good Stock To Buy?

Among these funds, Basswood Capital held the most valuable stake in Parke Bancorp, Inc. (NASDAQ:PKBK), which was worth $7 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $3 million worth of shares. Zebra Capital Management 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 Parke Bancorp, Inc. (NASDAQ:PKBK), around 0.32% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.24 percent of its 13F equity portfolio to PKBK.

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 Parke Bancorp, Inc. (NASDAQ:PKBK) but similarly valued. These stocks are Eneti Inc. (NYSE:NETI), ZK International Group Co., Ltd. (NASDAQ:ZKIN), Onconova Therapeutics, Inc. (NASDAQ:ONTX), MICT, Inc. (NASDAQ:MICT), Checkpoint Therapeutics, Inc. (NASDAQ:CKPT), BCB Bancorp, Inc. (NASDAQ:BCBP), and FVCBankcorp, Inc. (NASDAQ:FVCB). All of these stocks' market caps resemble PKBK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NETI,2,4073,0 ZKIN,3,1032,2 ONTX,10,8984,9 MICT,3,2125,-3 CKPT,7,10847,3 BCBP,3,21333,-1 FVCB,3,5130,0 Average,4.4,7646,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.4 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $10 million in PKBK's case. Onconova Therapeutics, Inc. (NASDAQ:ONTX) is the most popular stock in this table. On the other hand Eneti Inc. (NYSE:NETI) is the least popular one with only 2 bullish hedge fund positions. Parke Bancorp, Inc. (NASDAQ:PKBK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PKBK is 33.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately PKBK wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PKBK investors were disappointed as the stock returned 3% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.

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