In this article we will check out the progression of hedge fund sentiment towards Western New England Bancorp, Inc. (NASDAQ:WNEB) 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.
Western New England Bancorp, Inc. (NASDAQ:WNEB) has seen a decrease in activity from the world's largest hedge funds in recent months. WNEB was in 5 hedge funds' portfolios at the end of March. There were 6 hedge funds in our database with WNEB holdings at the end of the previous quarter. Our calculations also showed that WNEB 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.
Today there are many indicators stock traders employ to appraise their stock investments. Two of the best indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the market by a healthy amount (see the details here).
[caption id="attachment_26340" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's check out the new hedge fund action regarding Western New England Bancorp, Inc. (NASDAQ:WNEB).
How are hedge funds trading Western New England Bancorp, Inc. (NASDAQ:WNEB)?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in WNEB a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Western New England Bancorp, Inc. (NASDAQ:WNEB) was held by Renaissance Technologies, which reported holding $11.9 million worth of stock at the end of September. It was followed by Royce & Associates with a $3.4 million position. Other investors bullish on the company included Prospector Partners, Winton Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Prospector Partners allocated the biggest weight to Western New England Bancorp, Inc. (NASDAQ:WNEB), around 0.22% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to WNEB.
Seeing as Western New England Bancorp, Inc. (NASDAQ:WNEB) has faced declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few money managers who were dropping their full holdings in the first quarter. At the top of the heap, Israel Englander's Millennium Management sold off the largest investment of the "upper crust" of funds followed by Insider Monkey, worth about $0.1 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dropped its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to Western New England Bancorp, Inc. (NASDAQ:WNEB). These stocks are Penns Woods Bancorp, Inc. (NASDAQ:PWOD), First Choice Bancorp (NASDAQ:FCBP), Gladstone Capital Corporation (NASDAQ:GLAD), and Gogo Inc (NASDAQ:GOGO). All of these stocks' market caps resemble WNEB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PWOD,1,4410,0 FCBP,1,761,0 GLAD,4,3731,-3 GOGO,19,39849,-3 Average,6.25,12188,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $17 million in WNEB's case. Gogo Inc (NASDAQ:GOGO) is the most popular stock in this table. On the other hand Penns Woods Bancorp, Inc. (NASDAQ:PWOD) is the least popular one with only 1 bullish hedge fund positions. Western New England Bancorp, Inc. (NASDAQ:WNEB) 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately WNEB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WNEB investors were disappointed as the stock returned -21.1% 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.
Disclosure: None. This article was originally published at Insider Monkey.