We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Old Point Financial Corporation (NASDAQ:OPOF).
Is Old Point Financial Corporation (NASDAQ:OPOF) a first-rate investment now? Money managers are becoming hopeful. The number of bullish hedge fund bets improved by 1 in recent months. Our calculations also showed that OPOF isn't among the 30 most popular stocks among hedge funds. OPOF was in 3 hedge funds' portfolios at the end of September. There were 2 hedge funds in our database with OPOF holdings at the end of the previous quarter.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/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. Let's take a peek at the fresh hedge fund action surrounding Old Point Financial Corporation (NASDAQ:OPOF).
What have hedge funds been doing with Old Point Financial Corporation (NASDAQ:OPOF)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OPOF over the last 17 quarters. So, let's find 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, Paul Magidson, Jonathan Cohen. And Ostrom Enders's Castine Capital Management has the number one position in Old Point Financial Corporation (NASDAQ:OPOF), worth close to $1.3 million, accounting for 0.4% of its total 13F portfolio. The second most bullish is Renaissance Technologies, with a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Castine Capital Management allocated the biggest weight to Old Point Financial Corporation (NASDAQ:OPOF), around 0.36% of its portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0009 percent of its 13F equity portfolio to OPOF.
As industrywide interest jumped, some big names were leading the bulls' herd. Castine Capital Management, managed by Paul Magidson, Jonathan Cohen. And Ostrom Enders, created the most outsized position in Old Point Financial Corporation (NASDAQ:OPOF). Castine Capital Management had $1.3 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Old Point Financial Corporation (NASDAQ:OPOF). We will take a look at MEI Pharma Inc (NASDAQ:MEIP), Pointer Telocation Ltd. (NASDAQ:PNTR), COMSCORE, Inc. (NASDAQ:SCOR), and Bancorp of New Jersey, Inc (NYSE:BKJ). This group of stocks' market caps resemble OPOF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MEIP,13,29548,0 PNTR,2,5370,-2 SCOR,18,38378,1 BKJ,4,7001,4 Average,9.25,20074,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $3 million in OPOF's case. COMSCORE, Inc. (NASDAQ:SCOR) is the most popular stock in this table. On the other hand Pointer Telocation Ltd. (NASDAQ:PNTR) is the least popular one with only 2 bullish hedge fund positions. Old Point Financial Corporation (NASDAQ:OPOF) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on OPOF as the stock returned 21.7% during Q4 (through 11/22) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.