At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Dime Community Bancshares, Inc. (NASDAQ:DCOM) makes for a good investment right now.
Dime Community Bancshares, Inc. (NASDAQ:DCOM) was in 9 hedge funds' portfolios at the end of June. DCOM has experienced an increase in activity from the world's largest hedge funds lately. There were 8 hedge funds in our database with DCOM positions at the end of the previous quarter. Our calculations also showed that DCOM isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the new hedge fund action regarding Dime Community Bancshares, Inc. (NASDAQ:DCOM).
What does smart money think about Dime Community Bancshares, Inc. (NASDAQ:DCOM)?
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the first quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in DCOM a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Polaris Capital Management held the most valuable stake in Dime Community Bancshares, Inc. (NASDAQ:DCOM), which was worth $18.9 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $12.1 million worth of shares. Moreover, Prospector Partners, AQR Capital Management, and Citadel Investment Group were also bullish on Dime Community Bancshares, Inc. (NASDAQ:DCOM), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers have jumped into Dime Community Bancshares, Inc. (NASDAQ:DCOM) headfirst. Millennium Management, managed by Israel Englander, created the largest position in Dime Community Bancshares, Inc. (NASDAQ:DCOM). Millennium Management had $0.3 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.3 million investment in the stock during the quarter.
Let's check out hedge fund activity in other stocks similar to Dime Community Bancshares, Inc. (NASDAQ:DCOM). These stocks are Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), Laredo Petroleum Inc (NYSE:LPI), Gladstone Commercial Corporation (NASDAQ:GOOD), and Cardlytics, Inc. (NASDAQ:CDLX). All of these stocks' market caps match DCOM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SOI,14,66032,-2 LPI,14,176652,-4 GOOD,5,69741,-1 CDLX,10,102679,1 Average,10.75,103776,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $39 million in DCOM's case. Solaris Oilfield Infrastructure, Inc. (NYSE:SOI) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 5 bullish hedge fund positions. Dime Community Bancshares, Inc. (NASDAQ:DCOM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on DCOM as the stock returned 13.5% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.