Does Berkshire Hills Bancorp, Inc. (NYSE:BHLB) 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.
Is Berkshire Hills Bancorp, Inc. (NYSE:BHLB) ready to rally soon? Investors who are in the know are taking an optimistic view. The number of long hedge fund bets went up by 1 lately. Our calculations also showed that BHLB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BHLB was in 10 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with BHLB positions at the end of the previous quarter.
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.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the new hedge fund action surrounding Berkshire Hills Bancorp, Inc. (NYSE:BHLB).
What have hedge funds been doing with Berkshire Hills Bancorp, Inc. (NYSE:BHLB)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BHLB over the last 17 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Berkshire Hills Bancorp, Inc. (NYSE:BHLB) was held by Renaissance Technologies, which reported holding $14 million worth of stock at the end of September. It was followed by Millennium Management with a $13.4 million position. Other investors bullish on the company included EJF Capital, Balyasny Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Berkshire Hills Bancorp, Inc. (NYSE:BHLB), around 0.96% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to BHLB.
Now, key hedge funds have jumped into Berkshire Hills Bancorp, Inc. (NYSE:BHLB) headfirst. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Berkshire Hills Bancorp, Inc. (NYSE:BHLB). ExodusPoint Capital had $0.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.7 million position during the quarter. The only other fund with a new position in the stock is Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks similar to Berkshire Hills Bancorp, Inc. (NYSE:BHLB). We will take a look at Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Uniqure NV (NASDAQ:QURE), Yunji Inc. (NASDAQ:YJ), and American Finance Trust, Inc. (NASDAQ:AFIN). This group of stocks’ market valuations are closest to BHLB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KLIC | 19 | 255818 | 2 |
| QURE | 38 | 538224 | 4 |
| YJ | 3 | 5331 | -1 |
| AFIN | 8 | 11654 | 4 |
| Average | 17 | 202757 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $40 million in BHLB’s case. Uniqure NV (NASDAQ:QURE) is the most popular stock in this table. On the other hand Yunji Inc. (NASDAQ:YJ) is the least popular one with only 3 bullish hedge fund positions. Berkshire Hills Bancorp, Inc. (NYSE:BHLB) 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 BHLB, though not to the same extent, as the stock returned 8.5% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
