At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Bryn Mawr Bank Corp. (NASDAQ:BMTC) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Bryn Mawr Bank Corp. (NASDAQ:BMTC) was in 10 hedge funds' portfolios at the end of March. BMTC has seen an increase in hedge fund interest in recent months. There were 9 hedge funds in our database with BMTC holdings at the end of the previous quarter. Our calculations also showed that BMTC 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. 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. Keeping this in mind let's take a gander at the new hedge fund action surrounding Bryn Mawr Bank Corp. (NASDAQ:BMTC).
What does smart money think about Bryn Mawr Bank Corp. (NASDAQ:BMTC)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in BMTC a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Bryn Mawr Bank Corp. (NASDAQ:BMTC) was held by Renaissance Technologies, which reported holding $22.5 million worth of stock at the end of September. It was followed by AltraVue Capital with a $2.5 million position. Other investors bullish on the company included Millennium Management, D E Shaw, and Royce & Associates. In terms of the portfolio weights assigned to each position AltraVue Capital allocated the biggest weight to Bryn Mawr Bank Corp. (NASDAQ:BMTC), around 2.03% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to BMTC.
As industrywide interest jumped, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most outsized position in Bryn Mawr Bank Corp. (NASDAQ:BMTC). Millennium Management had $1.6 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Bryn Mawr Bank Corp. (NASDAQ:BMTC). These stocks are Urstadt Biddle Properties Inc (NYSE:UBA), NOW Inc (NYSE:DNOW), TORM plc (NASDAQ:TRMD), and Invesco Mortgage Capital Inc (NYSE:IVR). All of these stocks' market caps are similar to BMTC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBA,8,26170,2 DNOW,19,55284,-2 TRMD,4,419530,1 IVR,15,19381,0 Average,11.5,130091,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $32 million in BMTC's case. NOW Inc (NYSE:DNOW) is the most popular stock in this table. On the other hand TORM plc (NASDAQ:TRMD) is the least popular one with only 4 bullish hedge fund positions. Bryn Mawr Bank Corp. (NASDAQ:BMTC) 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately BMTC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BMTC investors were disappointed as the stock returned -1.7% 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.