Is Washington Trust Bancorp, Inc. (NASDAQ:WASH) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Washington Trust Bancorp, Inc. (NASDAQ:WASH) investors should be aware of an increase in support from the world's most elite money managers in recent months. Our calculations also showed that WASH 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. We're going to review the recent hedge fund action regarding Washington Trust Bancorp, Inc. (NASDAQ:WASH).
How are hedge funds trading Washington Trust Bancorp, Inc. (NASDAQ:WASH)?
At Q2's end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 75% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in WASH a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Washington Trust Bancorp, Inc. (NASDAQ:WASH), with a stake worth $26.1 million reported as of the end of March. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $0.6 million. Driehaus Capital, Two Sigma Advisors, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds were leading the bulls' herd. Millennium Management, managed by Israel Englander, established the most valuable position in Washington Trust Bancorp, Inc. (NASDAQ:WASH). Millennium Management had $0.6 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $0.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is D. E. Shaw's D E Shaw.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Washington Trust Bancorp, Inc. (NASDAQ:WASH) but similarly valued. We will take a look at Associated Capital Group, Inc. (NYSE:AC), Stoneridge, Inc. (NYSE:SRI), Rudolph Technologies Inc (NYSE:RTEC), and Golden Ocean Group Limited (NASDAQ:GOGL). All of these stocks' market caps match WASH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AC,6,66735,-1 SRI,15,88433,-5 RTEC,8,93352,-4 GOGL,7,185539,-1 Average,9,108515,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $29 million in WASH's case. Stoneridge, Inc. (NYSE:SRI) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 6 bullish hedge fund positions. Washington Trust Bancorp, Inc. (NASDAQ:WASH) 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 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. Unfortunately WASH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WASH investors were disappointed as the stock returned -6.4% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.