At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Cortland Bancorp (NASDAQ:CLDB).
Cortland Bancorp (NASDAQ:CLDB) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the first quarter of 2020. At the end of this article we will also compare CLDB to other stocks including MSB Financial Corp. (NASDAQ:MSBF), China Jo Jo Drugstores Inc (NASDAQ:CJJD), and Identive, Inc. (NASDAQ:INVE) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_249122" align="aligncenter" width="399"] Wall Street Bull[/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. With all of this in mind we're going to take a look at the key hedge fund action encompassing Cortland Bancorp (NASDAQ:CLDB).
What does smart money think about Cortland Bancorp (NASDAQ:CLDB)?
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 0% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in CLDB a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Frederick DiSanto's Ancora Advisors has the most valuable position in Cortland Bancorp (NASDAQ:CLDB), worth close to $4.2 million, amounting to 0.2% of its total 13F portfolio. On Ancora Advisors's heels is Emanuel J. Friedman of EJF Capital, with a $0.9 million position; 0.2% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to Cortland Bancorp (NASDAQ:CLDB), around 0.36% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, dishing out 0.2 percent of its 13F equity portfolio to CLDB.
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 Cortland Bancorp (NASDAQ:CLDB) but similarly valued. We will take a look at MSB Financial Corp. (NASDAQ:MSBF), China Jo Jo Drugstores Inc (NASDAQ:CJJD), Identive, Inc. (NASDAQ:INVE), and InnerWorkings, Inc. (NASDAQ:INWK). This group of stocks' market caps are closest to CLDB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSBF,6,13953,-1 CJJD,3,10594,-2 INVE,2,4026,-1 INWK,11,7969,0 Average,5.5,9136,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $6 million in CLDB's case. InnerWorkings, Inc. (NASDAQ:INWK) is the most popular stock in this table. On the other hand Identive, Inc. (NASDAQ:INVE) is the least popular one with only 2 bullish hedge fund positions. Cortland Bancorp (NASDAQ:CLDB) 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 CLDB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CLDB investors were disappointed as the stock returned -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.