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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Rhinebeck Bancorp, Inc. (NASDAQ:RBKB) based on those filings.
Is RBKB a good stock to buy? Hedge fund interest in Rhinebeck Bancorp, Inc. (NASDAQ:RBKB) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RBKB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as WISeKey International Holding AG (NASDAQ:WKEY), Everspin Technologies, Inc. (NASDAQ:MRAM), and Ocean Bio-Chem, Inc. (NASDAQ:OBCI) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Emanuel Friedman of EJF Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a gander at the fresh hedge fund action encompassing Rhinebeck Bancorp, Inc. (NASDAQ:RBKB).
Do Hedge Funds Think RBKB Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RBKB over the last 23 quarters. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, EJF Capital, managed by Emanuel J. Friedman, holds the most valuable position in Rhinebeck Bancorp, Inc. (NASDAQ:RBKB). EJF Capital has a $6.8 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), around 0.49% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0002 percent of its 13F equity portfolio to RBKB.
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 similar to Rhinebeck Bancorp, Inc. (NASDAQ:RBKB). These stocks are WISeKey International Holding AG (NASDAQ:WKEY), Everspin Technologies, Inc. (NASDAQ:MRAM), Ocean Bio-Chem, Inc. (NASDAQ:OBCI), Caladrius Biosciences Inc (NASDAQ:CLBS), Allied Esports Entertainment, Inc. (NASDAQ:AESE), Regulus Therapeutics Inc (NASDAQ:RGLS), and Beyond Air, Inc. (NASDAQ:XAIR). This group of stocks' market values are similar to RBKB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WKEY,3,662,1 MRAM,5,2030,0 OBCI,3,5377,-1 CLBS,5,3949,2 AESE,2,414,0 RGLS,6,14908,2 XAIR,5,6015,1 Average,4.1,4765,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $7 million in RBKB's case. Regulus Therapeutics Inc (NASDAQ:RGLS) is the most popular stock in this table. On the other hand Allied Esports Entertainment, Inc. (NASDAQ:AESE) is the least popular one with only 2 bullish hedge fund positions. Rhinebeck Bancorp, Inc. (NASDAQ:RBKB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RBKB is 47.5. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately RBKB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RBKB investors were disappointed as the stock returned 2.4% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.