Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Severn Bancorp Inc (NASDAQ:SVBI).
Hedge fund interest in Severn Bancorp Inc (NASDAQ:SVBI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare SVBI to other stocks including Five Prime Therapeutics Inc (NASDAQ:FPRX), Escalade, Inc. (NASDAQ:ESCA), and Platinum Group Metals Limited (NYSE:PLG) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most investors, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are greater than 8000 funds trading at present, Our experts look at the leaders of this group, around 850 funds. It is estimated that this group of investors command the lion's share of the hedge fund industry's total capital, and by following their first-class stock picks, Insider Monkey has unsheathed various investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_26286" align="aligncenter" width="359"] Jim Simons Founder of Renaissance Technologies[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's analyze the fresh hedge fund action surrounding Severn Bancorp Inc (NASDAQ:SVBI).
What have hedge funds been doing with Severn Bancorp Inc (NASDAQ:SVBI)?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SVBI over the last 18 quarters. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Emanuel J. Friedman's EJF Capital has the most valuable position in Severn Bancorp Inc (NASDAQ:SVBI), worth close to $6.4 million, corresponding to 1.4% of its total 13F portfolio. The second largest stake is held by Fourthstone LLC, managed by Phil Stone, which holds a $3.3 million position; 3% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Jeffrey Gendell's Tontine Asset Management, Renaissance Technologies and . In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Severn Bancorp Inc (NASDAQ:SVBI), around 3% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, setting aside 1.35 percent of its 13F equity portfolio to SVBI.
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 also examine hedge fund activity in other stocks - not necessarily in the same industry as Severn Bancorp Inc (NASDAQ:SVBI) but similarly valued. We will take a look at Five Prime Therapeutics Inc (NASDAQ:FPRX), Escalade, Inc. (NASDAQ:ESCA), Platinum Group Metals Limited (NYSE:PLG), and Hill International Inc (NYSE:HIL). This group of stocks' market valuations are similar to SVBI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FPRX,16,29194,-3 ESCA,3,5879,0 PLG,3,3650,0 HIL,10,26366,-3 Average,8,16272,-1.5 [/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 $16 million. That figure was $12 million in SVBI's case. Five Prime Therapeutics Inc (NASDAQ:FPRX) is the most popular stock in this table. On the other hand Escalade, Inc. (NASDAQ:ESCA) is the least popular one with only 3 bullish hedge fund positions. Severn Bancorp Inc (NASDAQ:SVBI) 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately SVBI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SVBI investors were disappointed as the stock returned -5% 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.