【oceanside slip and fall attorney】Where Do Hedge Funds Stand On Pacific Mercantile Bancorp (PMBC)?
Theoceanside slip and fall attorney 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 J. Friedman
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).
Story continues
Is PMBC A Good Stock To Buy?
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
.
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- 5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
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