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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Republic First Bancorp, Inc. (NASDAQ:FRBK) in this article.
Is Republic First Bancorp (FRBK) a good stock to buy now? FRBK has experienced a decrease in activity from the world's largest hedge funds in recent months. Republic First Bancorp, Inc. (NASDAQ:FRBK) was in 5 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. Our calculations also showed that FRBK 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).
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.
David E. Shaw of D.E. Shaw
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Now we're going to take a glance at the new hedge fund action encompassing Republic First Bancorp, Inc. (NASDAQ:FRBK).
Hedge fund activity in Republic First Bancorp, Inc. (NASDAQ:FRBK)
At third quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the second quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in FRBK a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Republic First Bancorp, Inc. (NASDAQ:FRBK), which was worth $1.8 million at the end of the third quarter. On the second spot was D E Shaw which amassed $0.4 million worth of shares. Two Sigma Advisors, Bailard Inc, and Citadel Investment Group 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 Bailard Inc allocated the biggest weight to Republic First Bancorp, Inc. (NASDAQ:FRBK), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0018 percent of its 13F equity portfolio to FRBK.
Since Republic First Bancorp, Inc. (NASDAQ:FRBK) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers who were dropping their full holdings last quarter. Interestingly, David Harding's Winton Capital Management dumped the biggest investment of the "upper crust" of funds watched by Insider Monkey, worth an estimated $0.1 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also cut its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Republic First Bancorp, Inc. (NASDAQ:FRBK). We will take a look at Adamas Pharmaceuticals Inc (NASDAQ:ADMS), Remark Holdings, Inc. (NASDAQ:MARK), Innovative Solutions & Support Inc (NASDAQ:ISSC), Permian Basin Royalty Trust (NYSE:PBT), Envela Corporation (NYSE:ELA), Erytech Pharma S.A. (NASDAQ:ERYP), and CONSOL Energy Inc. (NYSE:CEIX). This group of stocks' market values match FRBK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADMS,12,28074,1 MARK,3,1343,-2 ISSC,5,5403,2 PBT,3,1010,-1 ELA,1,1782,-1 ERYP,2,4002,0 CEIX,10,10430,-3 Average,5.1,7435,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $3 million in FRBK's case. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) is the most popular stock in this table. On the other hand Envela Corporation (NYSE:ELA) is the least popular one with only 1 bullish hedge fund positions. Republic First Bancorp, Inc. (NASDAQ:FRBK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FRBK is 39.9. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on FRBK as the stock returned 60.6% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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