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In this article we will take a look at whether hedge funds think Community Bankers Trust Corp. (NASDAQ:ESXB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Community Bankers Trust Corp. (NASDAQ:ESXB) was in 4 hedge funds' portfolios at the end of September. The all time high for this statistics is 7. ESXB investors should pay attention to a decrease in support from the world's most elite money managers of late. There were 6 hedge funds in our database with ESXB holdings at the end of June. Our calculations also showed that ESXB 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.
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 10 most profitable companies in the world 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. Now let's take a peek at the fresh hedge fund action encompassing Community Bankers Trust Corp. (NASDAQ:ESXB).
What have hedge funds been doing with Community Bankers Trust Corp. (NASDAQ:ESXB)?
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in ESXB a year ago. So, let's check out 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, Fourthstone LLC, managed by Phil Stone, holds the number one position in Community Bankers Trust Corp. (NASDAQ:ESXB). Fourthstone LLC has a $5.2 million position in the stock, comprising 4.4% of its 13F portfolio. On Fourthstone LLC's heels is Ancora Advisors, managed by Frederick DiSanto, which holds a $1.9 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that are bullish contain Renaissance Technologies, Anton Schutz's Mendon Capital Advisors and . In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Community Bankers Trust Corp. (NASDAQ:ESXB), around 4.35% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to ESXB.
Because Community Bankers Trust Corp. (NASDAQ:ESXB) has witnessed a decline in interest from hedge fund managers, it's easy to see that there is a sect of money managers that decided to sell off their positions entirely heading into Q4. Interestingly, Paul Magidson, Jonathan Cohen. And Ostrom Enders's Castine Capital Management said goodbye to the largest investment of all the hedgies tracked by Insider Monkey, comprising an estimated $7.6 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dumped about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Community Bankers Trust Corp. (NASDAQ:ESXB). We will take a look at HC2 Holdings Inc (NYSE:HCHC), 9 Meters Biopharma, Inc. (NASDAQ:NMTR), Ferroglobe PLC (NASDAQ:GSM), MTBC, Inc. (NASDAQ:MTBC), StealthGas Inc. (NASDAQ:GASS), Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), and PRGX Global Inc (NASDAQ:PRGX). This group of stocks' market values match ESXB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HCHC,11,3880,-1 NMTR,5,21738,2 GSM,9,11679,-2 MTBC,4,7636,-2 GASS,5,44165,0 CRVS,7,52499,-2 PRGX,9,38796,-1 Average,7.1,25770,-0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $9 million in ESXB's case. HC2 Holdings Inc (NYSE:HCHC) is the most popular stock in this table. On the other hand MTBC, Inc. (NASDAQ:MTBC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Community Bankers Trust Corp. (NASDAQ:ESXB) is even less popular than MTBC. Our overall hedge fund sentiment score for ESXB is 20.1. 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. Hedge funds clearly dropped the ball on ESXB 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 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 ESXB as the stock returned 33.3% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.