Is QCR Holdings, Inc. (NASDAQ:QCRH) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
QCR Holdings, Inc. (NASDAQ:QCRH) was in 8 hedge funds' portfolios at the end of June. QCRH has seen a decrease in hedge fund sentiment lately. There were 10 hedge funds in our database with QCRH positions at the end of the previous quarter. Our calculations also showed that QCRH isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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' 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's view the recent hedge fund action encompassing QCR Holdings, Inc. (NASDAQ:QCRH).
What have hedge funds been doing with QCR Holdings, Inc. (NASDAQ:QCRH)?
At Q2's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in QCRH over the last 16 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in QCR Holdings, Inc. (NASDAQ:QCRH) was held by Renaissance Technologies, which reported holding $18.8 million worth of stock at the end of March. It was followed by Castine Capital Management with a $15.3 million position. Other investors bullish on the company included Endicott Management, Basswood Capital, and Elizabeth Park Capital Management.
Due to the fact that QCR Holdings, Inc. (NASDAQ:QCRH) has faced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there was a specific group of money managers who were dropping their positions entirely last quarter. At the top of the heap, Israel Englander's Millennium Management dropped the biggest investment of the "upper crust" of funds followed by Insider Monkey, comprising close to $2.8 million in stock. Emanuel J. Friedman's fund, EJF Capital, also said goodbye to its stock, about $0.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to QCR Holdings, Inc. (NASDAQ:QCRH). We will take a look at Akebia Therapeutics Inc (NASDAQ:AKBA), Revance Therapeutics Inc (NASDAQ:RVNC), Ellington Financial Inc. (NYSE:EFC), and Casa Systems, Inc. (NASDAQ:CASA). This group of stocks' market values match QCRH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AKBA,14,194634,-5 RVNC,10,27622,-2 EFC,9,47666,-1 CASA,13,20586,-6 Average,11.5,72627,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $66 million in QCRH's case. Akebia Therapeutics Inc (NASDAQ:AKBA) is the most popular stock in this table. On the other hand Ellington Financial Inc. (NYSE:EFC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks QCR Holdings, Inc. (NASDAQ:QCRH) is even less popular than EFC. Hedge funds clearly dropped the ball on QCRH as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on QCRH as the stock returned 9.1% during the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.