(Original post found here)
After conducting a proprietary sentiment analysis of the latest news headlines for companies in the Financials industry, an interesting name popped up. 1st Source Corporation (NASDAQ:SRCE) has seen overwhelmingly positive news coverage relative to other names in the industry.
The Significance of Herd Behavior and Extreme Investor Sentiment
There have been academic studies that show investors tend to place too much importance on recent information, also known as psychological anchoring.
During periods of negative news, investors may continue to sell a stock, pushing it below its fair value. Conversely, during periods of positive news, investors may get overly optimistic and push the stock beyond fair value.
This is the goal of Contextuall: to identify examples where herd behavior has reached extreme levels.
We believe that, by identifying these areas of one-sided sentiment, investors could use these contrarian signals as a starting point for their own research.
Sentiment Stats: 1st Source Corporation (SRCE) Compared to the Financials Industry
5.36% of headlines have been classified as Negative (vs. an industry average of 10.28%).
Given the extreme bullishness in the media about the stock, should you be careful? With everyone pushing good news on the company, how much upside is left to price in?
Any comments on these sentiment trends? Let us know in the comment section.