Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Timberland Bancorp, Inc. (NASDAQ:TSBK).
Hedge fund interest in Timberland Bancorp, Inc. (NASDAQ:TSBK) 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 Panhandle Oil and Gas Inc. (NYSE:PHX), L.B. Foster Company (NASDAQ:FSTR), and Celsius Holdings, Inc. (NASDAQ:CELH) to gather more data points. Our calculations also showed that TSBK isn't among the 30 most popular stocks among hedge funds.
At the moment there are dozens of methods investors have at their disposal to value publicly traded companies. Two of the most useful methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the S&P 500 by a healthy margin (see the details here).
[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/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. We're going to take a look at the new hedge fund action encompassing Timberland Bancorp, Inc. (NASDAQ:TSBK).
How are hedge funds trading Timberland Bancorp, Inc. (NASDAQ:TSBK)?
Heading into the fourth quarter of 2019, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TSBK over the last 17 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce's Royce & Associates has the largest position in Timberland Bancorp, Inc. (NASDAQ:TSBK), worth close to $18.7 million, corresponding to 0.2% of its total 13F portfolio. On Royce & Associates's heels is Renaissance Technologies, with a $11.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Timberland Bancorp, Inc. (NASDAQ:TSBK), around 0.17% of its portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to TSBK.
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 go over hedge fund activity in other stocks - not necessarily in the same industry as Timberland Bancorp, Inc. (NASDAQ:TSBK) but similarly valued. These stocks are Panhandle Oil and Gas Inc. (NYSE:PHX), L.B. Foster Company (NASDAQ:FSTR), Celsius Holdings, Inc. (NASDAQ:CELH), and Century Casinos, Inc. (NASDAQ:CNTY). This group of stocks' market values are similar to TSBK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PHX,3,34248,-1 FSTR,11,52504,-4 CELH,5,820,3 CNTY,13,51313,3 Average,8,34721,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $30 million in TSBK's case. Century Casinos, Inc. (NASDAQ:CNTY) is the most popular stock in this table. On the other hand Panhandle Oil and Gas Inc. (NYSE:PHX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Timberland Bancorp, Inc. (NASDAQ:TSBK) is even less popular than PHX. Hedge funds dodged a bullet by taking a bearish stance towards TSBK. 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 TSBK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TSBK investors were disappointed as the stock returned 2.8% 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.