Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Northwest Bancshares, Inc. (NASDAQ:NWBI).
Northwest Bancshares, Inc. (NASDAQ:NWBI) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of the fourth quarter of 2018. At the end of this article we will also compare NWBI to other stocks including MINDBODY Inc (NASDAQ:MB), Northwest Natural Holding Company (NYSE:NWN), and Visteon Corp (NASDAQ:VC) to get a better sense of its popularity.
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 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 32 percentage points since May 2014 through March 12, 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.
We're going to go over the new hedge fund action encompassing Northwest Bancshares, Inc. (NASDAQ:NWBI).
What does the smart money think about Northwest Bancshares, Inc. (NASDAQ:NWBI)?
Heading into the first quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NWBI over the last 14 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Northwest Bancshares, Inc. (NASDAQ:NWBI), with a stake worth $43.6 million reported as of the end of December. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $10.6 million. Balyasny Asset Management, Two Sigma Advisors, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 999. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let's now review hedge fund activity in other stocks similar to Northwest Bancshares, Inc. (NASDAQ:NWBI). We will take a look at MINDBODY Inc (NASDAQ:MB), Northwest Natural Holding Company (NYSE:NWN), Visteon Corp (NASDAQ:VC), and Avis Budget Group Inc. (NASDAQ:CAR). All of these stocks' market caps match NWBI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MB,16,373023,-3 NWN,10,64831,1 VC,20,249029,-2 CAR,29,607511,0 Average,18.75,323599,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $324 million. That figure was $64 million in NWBI's case. Avis Budget Group Inc. (NASDAQ:CAR) is the most popular stock in this table. On the other hand Northwest Natural Holding Company (NYSE:NWN) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Northwest Bancshares, Inc. (NASDAQ:NWBI) is even less popular than NWN. Hedge funds dodged a bullet by taking a bearish stance towards NWBI. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NWBI wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); NWBI investors were disappointed as the stock returned 2.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.