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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Metropolitan Bank Holding Corp. (NYSE:MCB).
Is MCB a good stock to buy now? Metropolitan Bank Holding Corp. (NYSE:MCB) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds' portfolios at the end of September. Our calculations also showed that MCB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare MCB to other stocks including Orion Energy Systems, Inc. (NYSE:OESX), The ExOne Company (NASDAQ:XONE), and Summit Therapeutics Inc. (NASDAQ:SMMT) to get a better sense of its popularity.
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 66 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.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. Keeping this in mind we're going to analyze the latest hedge fund action regarding Metropolitan Bank Holding Corp. (NYSE:MCB).
How have hedgies been trading Metropolitan Bank Holding Corp. (NYSE:MCB)?
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in MCB 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.
Among these funds, Endicott Management held the most valuable stake in Metropolitan Bank Holding Corp. (NYSE:MCB), which was worth $18.1 million at the end of the third quarter. On the second spot was Basswood Capital which amassed $11.7 million worth of shares. EJF Capital, Renaissance Technologies, and Millennium Management were 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 Endicott Management allocated the biggest weight to Metropolitan Bank Holding Corp. (NYSE:MCB), around 24.96% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 0.97 percent of its 13F equity portfolio to MCB.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let's now review hedge fund activity in other stocks similar to Metropolitan Bank Holding Corp. (NYSE:MCB). These stocks are Orion Energy Systems, Inc. (NASDAQ:OESX), The ExOne Company (NASDAQ:XONE), Summit Therapeutics Inc. (NASDAQ:SMMT), Hometrust Bancshares Inc (NASDAQ:HTBI), Gladstone Capital Corporation (NASDAQ:GLAD), Alta Equipment Group Inc. (NYSE:ALTG), and Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA). This group of stocks' market caps are similar to MCB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OESX,7,25463,1 XONE,5,3869,3 SMMT,1,1044,-2 HTBI,11,38106,-1 GLAD,3,3304,-1 ALTG,13,35500,-3 LTRPA,20,32328,-2 Average,8.6,19945,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $41 million in MCB's case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand Summit Therapeutics Inc. (NASDAQ:SMMT) is the least popular one with only 1 bullish hedge fund positions. Metropolitan Bank Holding Corp. (NYSE:MCB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MCB is 47. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on MCB as the stock returned 18.1% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.