The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of United Security Bancshares (NASDAQ:UBFO).
United Security Bancshares (NASDAQ:UBFO) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 2 hedge funds' portfolios at the end of September. 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 CompX International Inc. (NYSEAMEX:CIX), MMA Capital Holdings, Inc. (NASDAQ:MMAC), and Pacific Mercantile Bancorp (NASDAQ:PMBC) to gather more data points. Our calculations also showed that UBFO 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.
Why do we pay any attention at all to hedge fund sentiment? 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_26073" align="aligncenter" width="600"] Jim Simons of RENAISSANCE TECHNOLOGIES[/caption]
Let's analyze the new hedge fund action surrounding United Security Bancshares (NASDAQ:UBFO).
How have hedgies been trading United Security Bancshares (NASDAQ:UBFO)?
At the end of the third quarter, a total of 2 of the hedge funds tracked by Insider Monkey were bullish on this stock, the same as the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards UBFO over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in United Security Bancshares (NASDAQ:UBFO) was held by Elizabeth Park Capital Management, which reported holding $5.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $2.8 million position.
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 now review hedge fund activity in other stocks - not necessarily in the same industry as United Security Bancshares (NASDAQ:UBFO) but similarly valued. These stocks are CompX International Inc. (NYSEAMEX:CIX), MMA Capital Holdings, Inc. (NASDAQ:MMAC), Pacific Mercantile Bancorp (NASDAQ:PMBC), and Saga Communications, Inc. (NYSE:SGA). This group of stocks' market values match UBFO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CIX,4,13261,0 MMAC,1,2177,0 PMBC,4,21727,1 SGA,4,18666,1 Average,3.25,13958,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $9 million in UBFO's case. CompX International Inc. (NYSEAMEX:CIX) is the most popular stock in this table. On the other hand MMA Capital Holdings, Inc. (NASDAQ:MMAC) is the least popular one with only 1 bullish hedge fund positions. United Security Bancshares (NASDAQ:UBFO) is not the least popular stock in this group but hedge fund interest is still below average. 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 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. Unfortunately UBFO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UBFO investors were disappointed as the stock returned 0.3% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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