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 first 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 4.5 years and analyze what the smart money thinks of American National BankShares Inc (NASDAQ:AMNB) based on that data.
American National BankShares Inc (NASDAQ:AMNB) has experienced an increase in activity from the world's largest hedge funds recently. AMNB was in 3 hedge funds' portfolios at the end of March. There were 2 hedge funds in our database with AMNB positions at the end of the previous quarter. Our calculations also showed that AMNB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 S&P 500 ETFs by 44 percentage points since March 2017 (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.
[caption id="attachment_258236" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the recent hedge fund action encompassing American National BankShares Inc (NASDAQ:AMNB).
Hedge fund activity in American National BankShares Inc (NASDAQ:AMNB)
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 2 hedge funds with a bullish position in AMNB a year ago. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in American National BankShares Inc (NASDAQ:AMNB), which was worth $4.6 million at the end of the third quarter. On the second spot was Castine Capital Management which amassed $0.8 million worth of shares. Citadel Investment Group 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 Castine Capital Management allocated the biggest weight to American National BankShares Inc (NASDAQ:AMNB), around 0.42% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0045 percent of its 13F equity portfolio to AMNB.
Consequently, key money managers have jumped into American National BankShares Inc (NASDAQ:AMNB) headfirst. Citadel Investment Group, managed by Ken Griffin, established the most outsized position in American National BankShares Inc (NASDAQ:AMNB). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter.
Let's go over hedge fund activity in other stocks similar to American National BankShares Inc (NASDAQ:AMNB). We will take a look at Source Capital, Inc. (NYSE:SOR), ACNB Corporation (NASDAQ:ACNB), Gladstone Investment Corporation (NASDAQ:GAIN), and Ocular Therapeutix Inc (NASDAQ:OCUL). This group of stocks' market caps match AMNB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SOR,4,12484,2 ACNB,2,3264,1 GAIN,8,6075,0 OCUL,7,38905,-2 Average,5.25,15182,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $6 million in AMNB's case. Gladstone Investment Corporation (NASDAQ:GAIN) is the most popular stock in this table. On the other hand ACNB Corporation (NASDAQ:ACNB) is the least popular one with only 2 bullish hedge fund positions. American National BankShares Inc (NASDAQ:AMNB) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately AMNB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); AMNB investors were disappointed as the stock returned -1.2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.