Were Hedge Funds Right About Ameris Bancorp (ABCB)?
How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Ameris Bancorp (NASDAQ:ABCB).
Is Ameris Bancorp (NASDAQ:ABCB) ready to rally soon? Prominent investors were in a pessimistic mood. The number of long hedge fund positions shrunk by 2 recently. Ameris Bancorp (NASDAQ:ABCB) was in 16 hedge funds' portfolios at the end of March. The all time high for this statistic is 18. Our calculations also showed that ABCB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most investors, hedge funds are perceived as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds in operation today, Our researchers look at the aristocrats of this club, around 850 funds. These hedge fund managers manage most of the hedge fund industry's total asset base, and by paying attention to their top picks, Insider Monkey has brought to light various investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Lindenbaum of Basswood Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now we're going to take a gander at the recent hedge fund action surrounding Ameris Bancorp (NASDAQ:ABCB).
Do Hedge Funds Think ABCB Is A Good Stock To Buy Now?
At first quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ABCB 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.
Among these funds, Polaris Capital Management held the most valuable stake in Ameris Bancorp (NASDAQ:ABCB), which was worth $63.7 million at the end of the fourth quarter. On the second spot was Forest Hill Capital which amassed $7.9 million worth of shares. Mendon Capital Advisors, Interval Partners, and Basswood Capital were 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 Mendon Capital Advisors allocated the biggest weight to Ameris Bancorp (NASDAQ:ABCB), around 2.42% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, designating 2.41 percent of its 13F equity portfolio to ABCB.
Due to the fact that Ameris Bancorp (NASDAQ:ABCB) has experienced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there exists a select few money managers who were dropping their positions entirely heading into Q2. It's worth mentioning that Israel Englander's Millennium Management sold off the biggest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $11.8 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund sold off about $3.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds heading into Q2.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ameris Bancorp (NASDAQ:ABCB) but similarly valued. These stocks are Franklin Electric Co. (NASDAQ:FELE), Univar Solutions Inc (NYSE:UNVR), Nektar Therapeutics (NASDAQ:NKTR), Desktop Metal, Inc. (NYSE:DM), Sleep Number Corporation (NASDAQ:SNBR), Urban Outfitters, Inc. (NASDAQ:URBN), and Investors Bancorp, Inc. (NASDAQ:ISBC). This group of stocks' market valuations match ABCB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FELE,20,209341,3 UNVR,25,742227,-6 NKTR,18,234537,-1 DM,20,216231,-4 SNBR,21,256554,5 URBN,23,140764,-1 ISBC,12,78620,-12 Average,19.9,268325,-2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $268 million. That figure was $101 million in ABCB's case. Univar Solutions Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Investors Bancorp, Inc. (NASDAQ:ISBC) is the least popular one with only 12 bullish hedge fund positions. Ameris Bancorp (NASDAQ:ABCB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ABCB is 45.1. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately ABCB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ABCB investors were disappointed as the stock returned -12.2% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
