In this article we will check out the progression of hedge fund sentiment towards Broadwind Inc. (NASDAQ:BWEN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Broadwind Inc. (NASDAQ:BWEN) a buy, sell, or hold? The best stock pickers were becoming less confident. The number of long hedge fund bets went down by 1 recently. Broadwind Inc. (NASDAQ:BWEN) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. Our calculations also showed that BWEN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with BWEN holdings at the end of December.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 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 we're going to take a look at the latest hedge fund action regarding Broadwind Inc. (NASDAQ:BWEN).
Do Hedge Funds Think BWEN Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in BWEN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Broadwind Inc. (NASDAQ:BWEN), with a stake worth $2.2 million reported as of the end of March. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $1.5 million. Citadel Investment Group was 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 Renaissance Technologies allocated the biggest weight to Broadwind Inc. (NASDAQ:BWEN), around 0.0027% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.0011 percent of its 13F equity portfolio to BWEN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Luxor Capital Group. 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 BWEN as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Broadwind Inc. (NASDAQ:BWEN) but similarly valued. These stocks are Evaxion Biotech A/S (NASDAQ:EVAX), iSun, Inc. (NASDAQ:ISUN), China Customer Relations Centers, Inc. (NASDAQ:CCRC), ProPhase Labs Inc (NASDAQ:PRPH), American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT), Avino Silver & Gold Mines Ltd. (NYSE:ASM), and ReWalk Robotics Ltd. (NASDAQ:RWLK). This group of stocks' market values are closest to BWEN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVAX,3,2987,3 ISUN,1,140,1 CCRC,2,1295,0 PRPH,4,3164,3 AVCT,3,1243,-2 ASM,1,281,0 RWLK,4,8031,0 Average,2.6,2449,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.6 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $4 million in BWEN's case. ProPhase Labs Inc (NASDAQ:PRPH) is the most popular stock in this table. On the other hand iSun, Inc. (NASDAQ:ISUN) is the least popular one with only 1 bullish hedge fund positions. Broadwind Inc. (NASDAQ:BWEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BWEN is 50.2. 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. This is a slightly positive signal but 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 beat the market again by 3.3 percentage points. Unfortunately BWEN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BWEN were disappointed as the stock returned -26.8% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.