While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Central Valley Community Bancorp (NASDAQ:CVCY).
Central Valley Community Bancorp (NASDAQ:CVCY) shareholders have witnessed a decrease in enthusiasm from smart money of late. Central Valley Community Bancorp (NASDAQ:CVCY) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. Our calculations also showed that CVCY isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to analyze the latest hedge fund action surrounding Central Valley Community Bancorp (NASDAQ:CVCY).
Do Hedge Funds Think CVCY Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CVCY over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Central Valley Community Bancorp (NASDAQ:CVCY), with a stake worth $2.9 million reported as of the end of March. Trailing Renaissance Technologies was Prospector Partners, which amassed a stake valued at $1.6 million. Millennium Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Central Valley Community Bancorp (NASDAQ:CVCY), around 0.2% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0036 percent of its 13F equity portfolio to CVCY.
Because Central Valley Community Bancorp (NASDAQ:CVCY) has faced falling interest from the smart money, logic holds that there exists a select few funds that elected to cut their full holdings heading into Q2. Interestingly, Matthew Lindenbaum's Basswood Capital dropped the biggest stake of the 750 funds tracked by Insider Monkey, valued at about $0.3 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund dumped about $0.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds heading into Q2.
Let's now take a look at hedge fund activity in other stocks similar to Central Valley Community Bancorp (NASDAQ:CVCY). These stocks are Timberland Bancorp, Inc. (NASDAQ:TSBK), Oxford Square Capital Corp. (NASDAQ:OXSQ), MDC Partners Inc. (NASDAQ:MDCA), SC Health Corporation (NYSE:SCPE), Sanara MedTech Inc. (NASDAQ:SMTI), Ring Energy Inc (NYSE:REI), and Unity Bancorp, Inc. (NASDAQ:UNTY). This group of stocks' market caps match CVCY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TSBK,6,30762,0 OXSQ,5,4028,-2 MDCA,9,56465,-4 SCPE,17,54198,0 SMTI,5,9761,2 REI,7,2298,0 UNTY,4,20706,-1 Average,7.6,25460,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $5 million in CVCY's case. SC Health Corporation (NYSE:SCPE) is the most popular stock in this table. On the other hand Unity Bancorp, Inc. (NASDAQ:UNTY) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Central Valley Community Bancorp (NASDAQ:CVCY) is even less popular than UNTY. Our overall hedge fund sentiment score for CVCY is 16.9. 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 CVCY as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on CVCY as the stock returned 14% since Q1 (through June 11th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.