Is Bridgewater Bancshares, Inc. (BWB) A Good Stock To Buy?
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Bridgewater Bancshares, Inc. (NASDAQ:BWB) based on that data.
Is Bridgewater Bancshares, Inc. (NASDAQ:BWB) a great stock to buy now? Money managers are becoming less hopeful. The number of bullish hedge fund bets went down by 2 lately. Our calculations also showed that BWB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). BWB was in 8 hedge funds' portfolios at the end of March. There were 10 hedge funds in our database with BWB holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are greater than 8000 funds with their doors open today, Our experts look at the bigwigs of this group, approximately 850 funds. It is estimated that this group of investors handle the majority of the smart money's total asset base, and by following their matchless equity investments, Insider Monkey has formulated many investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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David Harding of Winton Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the latest hedge fund action encompassing Bridgewater Bancshares, Inc. (NASDAQ:BWB).
What does smart money think about Bridgewater Bancshares, Inc. (NASDAQ:BWB)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in BWB a year ago. So, let's find out 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, Emanuel J. Friedman's EJF Capital has the biggest position in Bridgewater Bancshares, Inc. (NASDAQ:BWB), worth close to $9.3 million, corresponding to 2% of its total 13F portfolio. On EJF Capital's heels of Renaissance Technologies, with a $5.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, John Overdeck and David Siegel's Two Sigma Advisors and David Harding's Winton Capital Management. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Bridgewater Bancshares, Inc. (NASDAQ:BWB), around 1.97% of its 13F portfolio. AlphaOne Capital Partners is also relatively very bullish on the stock, setting aside 0.77 percent of its 13F equity portfolio to BWB.
Due to the fact that Bridgewater Bancshares, Inc. (NASDAQ:BWB) has witnessed declining sentiment from the smart money, we can see that there were a few money managers that slashed their positions entirely by the end of the first quarter. Intriguingly, Israel Englander's Millennium Management said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, valued at about $1.6 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dropped its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Bridgewater Bancshares, Inc. (NASDAQ:BWB) but similarly valued. We will take a look at Endurance International Group Holdings Inc (NASDAQ:EIGI), Verrica Pharmaceuticals Inc. (NASDAQ:VRCA), Astronics Corporation (NASDAQ:ATRO), and Peabody Energy Corporation (NYSE:BTU). This group of stocks' market valuations match BWB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EIGI,13,32611,-1 VRCA,3,53609,-1 ATRO,15,63536,-1 BTU,25,129012,-4 Average,14,69692,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $18 million in BWB's case. Peabody Energy Corporation (NYSE:BTU) is the most popular stock in this table. On the other hand Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) is the least popular one with only 3 bullish hedge fund positions. Bridgewater Bancshares, Inc. (NASDAQ:BWB) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately BWB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BWB investors were disappointed as the stock returned 1.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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