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We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Territorial Bancorp Inc (NASDAQ:TBNK).
Hedge fund interest in Territorial Bancorp Inc (NASDAQ:TBNK) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Advanced Emissions Solutions, Inc. (NASDAQ:ADES), Preformed Line Products Company (NASDAQ:PLPC), and Central Valley Community Bancorp (NASDAQ:CVCY) to gather more data points. Our calculations also showed that TBNK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are assumed to be worthless, old investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, Our experts look at the leaders of this club, about 750 funds. It is estimated that this group of investors administer bulk of all hedge funds' total capital, and by observing their finest investments, Insider Monkey has formulated several investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
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John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to check out the new hedge fund action regarding Territorial Bancorp Inc (NASDAQ:TBNK).
What does smart money think about Territorial Bancorp Inc (NASDAQ:TBNK)?
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TBNK over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in Territorial Bancorp Inc (NASDAQ:TBNK), worth close to $19.3 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $3.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise David Harding's Winton Capital Management, John Overdeck and David Siegel's Two Sigma Advisors and . In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Territorial Bancorp Inc (NASDAQ:TBNK), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to TBNK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. 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 Winton Capital Management).
Let's also examine hedge fund activity in other stocks similar to Territorial Bancorp Inc (NASDAQ:TBNK). These stocks are Advanced Emissions Solutions, Inc. (NASDAQ:ADES), Preformed Line Products Company (NASDAQ:PLPC), Central Valley Community Bancorp (NASDAQ:CVCY), and BayCom Corp (NASDAQ:BCML). This group of stocks' market valuations match TBNK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADES,8,42100,0 PLPC,5,30118,0 CVCY,3,16452,0 BCML,5,25945,1 Average,5.25,28654,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $24 million in TBNK's case. Advanced Emissions Solutions, Inc. (NASDAQ:ADES) is the most popular stock in this table. On the other hand Central Valley Community Bancorp (NASDAQ:CVCY) is the least popular one with only 3 bullish hedge fund positions. Territorial Bancorp Inc (NASDAQ:TBNK) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on TBNK as the stock returned 11.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.