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Western New England Bancorp, Inc. (WNEB): Hedge Funds Are Snapping Up

Al Green

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Western New England Bancorp, Inc. (NASDAQ:WNEB).

Is Western New England Bancorp, Inc. (NASDAQ:WNEB) worth your attention right now? The smart money is buying. The number of long hedge fund bets rose by 1 in recent months. Our calculations also showed that WNEB isn't among the 30 most popular stocks among hedge funds.

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 18 percentage points since May 2014 through December 3, 2018 (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.

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Let's take a look at the new hedge fund action regarding Western New England Bancorp, Inc. (NASDAQ:WNEB).

Hedge fund activity in Western New England Bancorp, Inc. (NASDAQ:WNEB)

Heading into the fourth quarter of 2018, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards WNEB over the last 13 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds With WNEB Positions

When looking at the institutional investors followed by Insider Monkey, Jim Simons's Renaissance Technologies has the most valuable position in Western New England Bancorp, Inc. (NASDAQ:WNEB), worth close to $17.3 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Mendon Capital Advisors, led by Anton Schutz, holding a $9.7 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Chuck Royce's Royce & Associates, John D. Gillespie's Prospector Partners and Israel Englander's Millennium Management.

Now, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the biggest position in Western New England Bancorp, Inc. (NASDAQ:WNEB). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Western New England Bancorp, Inc. (NASDAQ:WNEB) but similarly valued. These stocks are Jumei International Holding Ltd (NYSE:JMEI), Bel Fuse, Inc. (NASDAQ:BELFB), BSB Bancorp Inc (NASDAQ:BLMT), and Craft Brew Alliance Inc (NASDAQ:BREW). This group of 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 JMEI,2,9753,-3 BELFB,9,25301,0 BLMT,2,10806,-1 BREW,15,32277,2 Average,7,19534,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $36 million in WNEB's case. Craft Brew Alliance Inc (NASDAQ:BREW) is the most popular stock in this table. On the other hand Jumei International Holding Ltd (NYSE:JMEI) is the least popular one with only 2 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. In this regard BREW might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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