Should I Avoid Bankwell Financial Group, Inc. (BWFG)?
In this article we will analyze whether Bankwell Financial Group, Inc. (NASDAQ:BWFG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Bankwell Financial Group, Inc. (NASDAQ:BWFG) worth your attention right now? The best stock pickers were getting less bullish. The number of long hedge fund positions were cut by 1 lately. Bankwell Financial Group, Inc. (NASDAQ:BWFG) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 6. Our calculations also showed that BWFG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 5 hedge funds in our database with BWFG positions at the end of the fourth quarter.
In the financial world there are a lot of metrics shareholders can use to analyze publicly traded companies. Two of the most under-the-radar metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the market by a solid margin (see the details here). 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 .
John Zaro of Bourgeon Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind let's take a glance at the latest hedge fund action surrounding Bankwell Financial Group, Inc. (NASDAQ:BWFG).
Do Hedge Funds Think BWFG Is A Good Stock To Buy Now?
At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BWFG over the last 23 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Robert I. Usdan and Wayne K. Goldstein's Endicott Management has the biggest position in Bankwell Financial Group, Inc. (NASDAQ:BWFG), worth close to $17.1 million, amounting to 4.7% of its total 13F portfolio. The second most bullish fund is Renaissance Technologies, with a $5.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions include Frederick Tucker Golden's Solas Capital Management, John Zaro's Bourgeon Capital and . In terms of the portfolio weights assigned to each position Endicott Management allocated the biggest weight to Bankwell Financial Group, Inc. (NASDAQ:BWFG), around 4.65% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, earmarking 2.89 percent of its 13F equity portfolio to BWFG.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Seidman Investment Partnership. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified BWFG as a viable investment and initiated a position in the stock.
Let's now review hedge fund activity in other stocks similar to Bankwell Financial Group, Inc. (NASDAQ:BWFG). We will take a look at Bank of Commerce Holdings (NASDAQ:BOCH), Investar Holding Corporation (NASDAQ:ISTR), TELA Bio, Inc. (NASDAQ:TELA), Kaixin Auto Holdings (NASDAQ:KXIN), First Business Financial Services Inc (NASDAQ:FBIZ), Monroe Capital Corp (NASDAQ:MRCC), and Matinas Biopharma Holdings, Inc. (NYSE:MTNB). This group of stocks' market caps are similar to BWFG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BOCH,3,6001,-1 ISTR,5,20928,0 TELA,9,70631,1 KXIN,5,490,0 FBIZ,3,6057,1 MRCC,3,2470,-2 MTNB,8,1763,-1 Average,5.1,15477,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $27 million in BWFG's case. TELA Bio, Inc. (NASDAQ:TELA) is the most popular stock in this table. On the other hand Bank of Commerce Holdings (NASDAQ:BOCH) is the least popular one with only 3 bullish hedge fund positions. Bankwell Financial Group, Inc. (NASDAQ:BWFG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BWFG is 32.3. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately BWFG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BWFG investors were disappointed as the stock returned 7% since the end of March (through 6/11) 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.
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