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Northwest Bancshares, Inc. (NWBI): Hedge Funds Cashing Out

Debasis Saha

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Northwest Bancshares, Inc. (NASDAQ:NWBI) based on those filings.

Northwest Bancshares, Inc. (NASDAQ:NWBI) investors should be aware of a decrease in enthusiasm from smart money in recent months. NWBI was in 14 hedge funds' portfolios at the end of March. There were 19 hedge funds in our database with NWBI positions at the end of the previous quarter. Our calculations also showed that NWBI 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.

At the moment there are numerous metrics stock market investors have at their disposal to value publicly traded companies. A pair of the less known metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top fund managers can outpace the S&P 500 by a very impressive amount (see the details here).

[caption id="attachment_844243" align="aligncenter" width="400"] Donald Sussman of Paloma Partners[/caption]

Donald Sussman Paloma Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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 glance at the fresh hedge fund action surrounding Northwest Bancshares, Inc. (NASDAQ:NWBI).

How are hedge funds trading Northwest Bancshares, Inc. (NASDAQ:NWBI)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NWBI over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NWBI A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Northwest Bancshares, Inc. (NASDAQ:NWBI), which was worth $9.6 million at the end of the third quarter. On the second spot was Millennium Management which amassed $1.9 million worth of shares. Citadel Investment Group, Holocene Advisors, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Northwest Bancshares, Inc. (NASDAQ:NWBI), around 0.54% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to NWBI.

Because Northwest Bancshares, Inc. (NASDAQ:NWBI) has faced declining sentiment from hedge fund managers, logic holds that there exists a select few money managers that elected to cut their positions entirely by the end of the first quarter. Interestingly, Steve Cohen's Point72 Asset Management cut the largest investment of the "upper crust" of funds followed by Insider Monkey, valued at close to $1.5 million in stock. Donald Sussman's fund, Paloma Partners, also dropped its stock, about $0.8 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds by the end of the first quarter.

Let's now review hedge fund activity in other stocks similar to Northwest Bancshares, Inc. (NASDAQ:NWBI). We will take a look at Cardiovascular Systems Inc (NASDAQ:CSII), USANA Health Sciences, Inc. (NYSE:USNA), Amerisafe, Inc. (NASDAQ:AMSF), and Zealand Pharma A/S (NASDAQ:ZEAL). This group of stocks' market valuations match NWBI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSII,12,86525,-4 USNA,13,133207,1 AMSF,9,35964,-1 ZEAL,3,27186,-1 Average,9.25,70721,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $20 million in NWBI's case. USANA Health Sciences, Inc. (NYSE:USNA) is the most popular stock in this table. On the other hand Zealand Pharma A/S (NASDAQ:ZEAL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Northwest Bancshares, Inc. (NASDAQ:NWBI) is more popular among hedge funds. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately NWBI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on NWBI were disappointed as the stock returned -14.5% during the second quarter (through June 25th) 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.

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