By: Manisha Sethi Jun. 08, 2018

Basswood Capital Management, L.L.C. disclosed it SEC 13F filing for Q1 2018 on May 15 and reported a portfolio value of $2,320.83 million. Its top 10 holdings account for 32.19% of the portfolio and its largest shareholding is 54,19,109 shares of Ally Financial, which amount to $147.12 million. In addition, the investor reports a total of 171 holdings including 37 new investments. Basswood Capital Management, L.L.C. was founded in 1998 and is based in New York. The firm primarily invests in public equity and fixed income markets across the globe and uses a fundamentally driven approach to make investments. It offers its services to pooled investment vehicles.

An analysis by Raltin shows that 59.47% of Basswood Capital Management’s new stock purchases outperform the S&P 500. About 27.45% of all stocks or 42 new stock purchases outperform the S&P 500 by more than 20% between Q1 2014 and Q1 2018. Only 37 of the 153 total stocks (or 24% of the total) underperform the S&P 500 by more than 10%. Details of Raltin’s methodology are available here. The following table classifies Basswood Capital Management’s stock on the basis of S&P outperformance categories.

S&P outperformance categoryNumber of new stock purchasesTotal new purchases (%)
-20 to -10%2113.73
Total stocks153

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Basswood Capital Management bought 37 new stocks across diverse sectors this quarter. Among its new purchases, Luther Burbank Corporation and Dime Community Bancshares, Inc. account for 0.81% and 0.64% of the portfolio value. The following table lists the investor’s top 20 new purchases for Q1 2018.

StocksNo. of sharesHolding value ($1,000)
Luther Burbank Corporation (LBC)1,572,07018,881
Dime Community Bancshares, Inc. (DCOM)811,01214,923
Hancock Holding Co. (HBHC)239,60112,387
Bank of Commerce Holdings (BCOH)587,6936,847
Franklin Financial Network Inc. (FSB)194,9686,356
DNB Financial Corp. (DNBF)174,0766,206
Homestreet, Inc.205,2795,881
MidWestOne Financial Group, Inc. (MOFG)168,9065,623
Bridgewater Bancshares, Inc. (BWB)361,6144,726
NCR Corp. (NCR)125,6423,960
OP Bancorp (OPBK)296,4023,690
EnerSys (ENS)52,5793,647
Byline Bancorp, Inc. (BY)134,1803,077
Fidelity Southern Corp. (LION)132,8703,065
Enterprise Bancorp, Inc. (EBTC)80,7432,849
RBB Bancorp (RBB)103,2942,724
QCR Holdings, Inc. (QCRH)55,5502,491
Heritage Financial Corp. (HFWA)62,2721,906
REV Group, Inc. (REVG)77,2561,604
First Bancshares, Inc. (FBMS)48,2831,557

The next table presents the investor’s portfolio value for the past five quarters, that is, from Q1 2016 to Q1 2017, with the top 3 holdings in each period that outperform the S&P 500.

PeriodTotal portfolio value ($Mn)Top holdings (ticker, % Of IRR difference from S&P 500)
Q1 20171,965.82Coastway Bancorp, Inc. (CWAY, 43.27), Live Oak Bancshares, Inc (LOB, 16.83), Flagstar Bancorp, Inc. (FBC, 13.99)
Q4 20162,273.68Bay Bancorp, Inc. (BYBK, 66.1), Ally Financial Inc. (ALLY, 34.05), Korn/Ferry International (KFY, 21.29)
Q3 20162,094.32Dana Incorporated (DAN, 63.44), Marlin Business Services Corp. (MRLN, 32.31), M & T Bank Corp. (MTB, 22.64)
Q2 20161,727.91Heritage Financial Corp. (HFWA, 35.31), OceanFirst Financial Corp. (OCFC, 33.83), Ameriprise Financial, Inc. (AMP, 26.24)
Q1 20161,846.16Zions Bancorporation (ZION, 58.78), East West Bancorp, Inc. (EWBC, 44.19), Wintrust Financial Corp. (WTFC, 41.18)

From the table, it is clear that the new purchases including Zions Bancorporation (ZION); Heritage Financial Corporation (HFWA); Dana Incorporated (DAN); Bay Bancorp, Inc. (BYBK); and Coastway Bancorp, Inc. (CWAY) outperform the index across the studied quarters.