Is CBM Bancorp, Inc. (CBMB) A Good Stock To Buy?

Reymerlyn Martin
·6 min read

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 817 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, about a month before the elections. In this article we look at what those investors think of CBM Bancorp, Inc. (NASDAQ:CBMB).

Hedge fund interest in CBM Bancorp, Inc. (NASDAQ:CBMB) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CBMB 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). 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 MIND C.T.I. Ltd. (NASDAQ:MNDO), Ring Energy Inc (NYSE:REI), and Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH) to gather more data points. 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Lawrence Seidman of Seidman Investment Partnership

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. 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. Now let's take a peek at the recent hedge fund action surrounding CBM Bancorp, Inc. (NASDAQ:CBMB).

What does smart money think about CBM Bancorp, Inc. (NASDAQ:CBMB)?

At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in CBMB a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in CBM Bancorp, Inc. (NASDAQ:CBMB) was held by Millennium Management, which reported holding $0.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.3 million position. The only other hedge fund that is bullish on the company was Seidman Investment Partnership.

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 similar to CBM Bancorp, Inc. (NASDAQ:CBMB). We will take a look at MIND C.T.I. Ltd. (NASDAQ:MNDO), Ring Energy Inc (NYSE:REI), Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH), Delcath Systems, Inc. (NASDAQ:DCTH), Espey Manufacturing & Electronics Corp. (NYSE:ESP), Strata Skin Sciences, Inc. (NASDAQ:SSKN), and AMREP Corporation (NYSE:AXR). This group of stocks' market caps resemble CBMB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNDO,1,152,0 REI,7,1621,-2 PPIH,2,3347,0 DCTH,2,1333,-1 ESP,1,2410,0 SSKN,3,9578,0 AXR,2,1452,0 Average,2.6,2842,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $1 million in CBMB's case. Ring Energy Inc (NYSE:REI) is the most popular stock in this table. On the other hand MIND C.T.I. Ltd. (NASDAQ:MNDO) is the least popular one with only 1 bullish hedge fund positions. CBM Bancorp, Inc. (NASDAQ:CBMB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CBMB is 44.2. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about betting on CBMB as the stock returned 7.7% since the end of Q3 (through 11/23) 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.

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