Does Bryn Mawr Bank Corp. (NASDAQ:BMTC) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Bryn Mawr Bank Corp. (NASDAQ:BMTC) 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 September. At the end of this article we will also compare BMTC to other stocks including Whiting Petroleum Corporation (NYSE:WLL), The Andersons, Inc. (NASDAQ:ANDE), and Photronics, Inc. (NASDAQ:PLAB) to get a better sense of its popularity.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a look at the latest hedge fund action regarding Bryn Mawr Bank Corp. (NASDAQ:BMTC).
How have hedgies been trading Bryn Mawr Bank Corp. (NASDAQ:BMTC)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BMTC over the last 17 quarters. 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 Bryn Mawr Bank Corp. (NASDAQ:BMTC), with a stake worth $28.9 million reported as of the end of September. Trailing Renaissance Technologies was Polaris Capital Management, which amassed a stake valued at $2.3 million. Winton Capital Management, Royce & Associates, and Millennium Management 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 Zebra Capital Management allocated the biggest weight to Bryn Mawr Bank Corp. (NASDAQ:BMTC), around 0.47% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to BMTC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: AlphaOne Capital Partners. 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 Winton Capital Management).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Bryn Mawr Bank Corp. (NASDAQ:BMTC) but similarly valued. We will take a look at Whiting Petroleum Corporation (NYSE:WLL), The Andersons, Inc. (NASDAQ:ANDE), Photronics, Inc. (NASDAQ:PLAB), and CrossFirst Bankshares, Inc. (NASDAQ:CFB). All of these stocks’ market caps are closest to BMTC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLL | 25 | 58618 | 2 |
| ANDE | 14 | 52713 | 9 |
| PLAB | 18 | 89460 | 1 |
| CFB | 6 | 20314 | 6 |
| Average | 15.75 | 55276 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $37 million in BMTC’s case. Whiting Petroleum Corporation (NYSE:WLL) is the most popular stock in this table. On the other hand CrossFirst Bankshares, Inc. (NASDAQ:CFB) is the least popular one with only 6 bullish hedge fund positions. Bryn Mawr Bank Corp. (NASDAQ:BMTC) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on BMTC, though not to the same extent, as the stock returned 8.3% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
