Will TowneBank (TOWN) burn these hedge funds?
The last 13F reporting period has passed and Insider Monkey is once again at the forefront when it comes to using this data gold mine. At Insider Monkey, we’ve gone through 873 13F cases that well-known hedge funds and value investors are required to file by the SEC. The 13F documents show the portfolio positions of funds and investors as of June 30. In this article, we take a look at what these investors think about TowneBank (NASDAQ: TOWN).
TowneBank (NASDAQ: TOWN) was in 10 hedge fund portfolios at the end of the second quarter of 2021. The all-time high for this statistic is 12. TOWN investors should pay attention to an increase in interest from hedge funds in recent years. month. There were 9 hedge funds in our database with TOWN positions at the end of the first quarter. Our calculations also showed that TOWN is not in the top 30 most popular stocks among hedge funds (click for Q2 rank).
In the 21st century investor’s toolkit, there are several signals that shareholders can use to value their equity investments. A duo of the more discreet signals are the movements of hedge funds and insider trading. Our researchers have shown that historically those who follow the best picks of the best hedge fund managers can outperform their index-focused peers by a very impressive margin (see details here). Additionally, our monthly newsletter’s long stock picks portfolio has returned 185.4% since March 2017 (through August 2021) and has beaten the S&P 500 Index by over 79 percentage points. You can download a sample issue of this newsletter from our website.
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. We go through lists like the top 10 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. With that in mind, let’s see the latest hedge fund action on TowneBank (NASDAQ: TOWN).
Do hedge funds think TOWN is a good stock to buy now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the first quarter of 2020. Below, you can see the development of the hedge fund sentiment towards TOWN over the past 24 quarters. So let’s take a look at which hedge funds were among the top stock holders and which hedge funds were making big moves.
According to publicly available data on hedge funds and institutional investors compiled by Insider Monkey, Renaissance Technologies holds the largest position in TowneBank (NASDAQ: TOWN), worth nearly $ 24.3 million, representing less than 0.1 %% of its total portfolio 13F. In second place, Royce & Associates, led by Chuck Royce, has a position of $ 10.5 million; 0.1% of its 13F portfolio is allocated to society. Other peers who hold long positions include Millennium Management from Israel Englander, AQR Capital Management from Cliff Asness and Peter Rathjens, Bruce Clarke and Arrowstreet Capital from John Campbell. In terms of the portfolio weights assigned to each position, Royce & Associates assigned the largest weight to TowneBank (NASDAQ: TOWN), around 0.07% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.03% of its 13F equity portfolio as TOWN.
As one might reasonably expect, specific fund managers were behind this uptrend. GLG Partners, led by Noam Gottesman, created the largest position in TowneBank (NASDAQ: TOWN). GLG Partners had invested $ 0.4 million in the company at the end of the quarter.
Now let’s take a look at the hedge fund activity in other stocks – not necessarily in the same industry as TowneBank (NASDAQ: TOWN) but of similar value. These stocks are Paramount Group Inc (NYSE: PGRE), Controladora Vuela Compañía de Aviación, SAB de CV (NYSE: VLRS), ALX Oncology Holdings Inc. (NASDAQ: ALXO), Zentalis Pharmaceuticals, Inc. (NASDAQ: ZNTL), Everi Holdings Inc (NYSE: EVRI), Echostar Corporation (NASDAQ: SATS) and KAR Auction Services Inc (NYSE: KAR). All market caps for these stocks are closest to TOWN’s market cap.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF position PGRE, 17.147529.0 VLRS, 16.253576.2 ALXO, 16.533205.5 ZNTL, 24.680636.8 EVRI , 31.319071.7 SATS, 26.246543, -2 KAR, 23.284975.1 Medium, 21.9.352219.3 [/table]
Check the table here if you have formatting issues.
As you can see, these stocks had an average of 21.9 hedge funds with bullish positions and the average amount invested in these stocks was $ 352 million. That figure was $ 42 million in the case of TOWN. Everi Holdings Inc (NYSE: EVRI) is the most popular stock in this table. On the other hand, Controladora Vuela Compañía de Aviación, SAB de CV (NYSE: VLRS) is the least popular with only 16 bullish hedge fund positions. Compared to these stocks, TowneBank (NASDAQ: TOWN) is even less popular than VLRS. Our overall hedge fund sentiment score for TOWN is 31. Stocks with a 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 dodged a bullet by taking a bearish stance towards TOWN. Our calculations showed that the 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27, but managed to beat the market again by 6.2 percentage points. Unfortunately, TOWN was not as popular as these 5 stocks (hedge fund sentiment was very bearish); TOWN investors were disappointed as the stock has returned 2.9% since the end of the second quarter (through 9/27) and has underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the 5 most popular stocks among hedge funds, as most of these stocks have already outperformed the market since 2019.
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Disclosure: none. This article originally appeared on Insider Monkey.