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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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Pacific Mercantile Bancorp (NASDAQ:PMBC) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Pacific Mercantile Bancorp (NASDAQ:PMBC) a superb investment right now? The smart money was in a bearish mood. The number of long hedge fund positions fell by 2 in recent months. Pacific Mercantile Bancorp (NASDAQ:PMBC) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. Our calculations also showed that PMBC 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). There were 8 hedge funds in our database with PMBC holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are plenty of formulas shareholders employ to size up stocks. Some of the most useful formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top money managers can outperform the S&P 500 by a superb amount (see the details here).
Emanuel Friedman of EJF Capital
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. Keeping this in mind let's view the new hedge fund action regarding Pacific Mercantile Bancorp (NASDAQ:PMBC).
What have hedge funds been doing with Pacific Mercantile Bancorp (NASDAQ:PMBC)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PMBC over the last 21 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Pacific Mercantile Bancorp (NASDAQ:PMBC) was held by Fourthstone LLC, which reported holding $7.6 million worth of stock at the end of September. It was followed by EJF Capital with a $6 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Paloma Partners. In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Pacific Mercantile Bancorp (NASDAQ:PMBC), around 6.38% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, setting aside 0.5 percent of its 13F equity portfolio to PMBC.
Judging by the fact that Pacific Mercantile Bancorp (NASDAQ:PMBC) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few hedgies that slashed their full holdings last quarter. Interestingly, Fred Cummings's Elizabeth Park Capital Management cut the largest position of all the hedgies monitored by Insider Monkey, totaling close to $1.1 million in stock, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital was right behind this move, as the fund said goodbye to about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Pacific Mercantile Bancorp (NASDAQ:PMBC). We will take a look at Sachem Capital Corp. (NYSE:SACH), BG Staffing Inc (NYSE:BGSF), Immutep Limited (NASDAQ:IMMP), Borr Drilling Limited (NYSE:BORR), OP Bancorp (NASDAQ:OPBK), Bank7 Corp. (NASDAQ:BSVN), and Avino Silver & Gold Mines Ltd. (NYSE:ASM). This group of stocks' market valuations are similar to PMBC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SACH,1,153,-1 BGSF,8,3378,3 IMMP,1,66,0 BORR,6,1637,1 OPBK,4,5883,0 BSVN,2,474,0 ASM,3,342,0 Average,3.6,1705,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $17 million in PMBC's case. BG Staffing Inc (NYSE:BGSF) is the most popular stock in this table. On the other hand Sachem Capital Corp. (NYSE:SACH) is the least popular one with only 1 bullish hedge fund positions. Pacific Mercantile Bancorp (NASDAQ:PMBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PMBC is 61.2. 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. Hedge funds were also right about betting on PMBC as the stock returned 34.4% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.