In this article we are going to use hedge fund sentiment as a tool and determine whether Western New England Bancorp, Inc. (NASDAQ:WNEB) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Western New England Bancorp, Inc. (NASDAQ:WNEB) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. Western New England Bancorp, Inc. (NASDAQ:WNEB) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 5 hedge funds in our database with WNEB holdings at the end of March. Our calculations also showed that WNEB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a peek at the fresh hedge fund action surrounding Western New England Bancorp, Inc. (NASDAQ:WNEB).
Do Hedge Funds Think WNEB Is A Good Stock To Buy Now?
At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in WNEB a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Western New England Bancorp, Inc. (NASDAQ:WNEB) was held by Renaissance Technologies, which reported holding $15 million worth of stock at the end of June. It was followed by Royce & Associates with a $5.4 million position. Other investors bullish on the company included Millennium Management, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Western New England Bancorp, Inc. (NASDAQ:WNEB), around 0.11% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to WNEB.
As industrywide interest jumped, some big names have jumped into Western New England Bancorp, Inc. (NASDAQ:WNEB) headfirst. Fourthstone LLC, managed by Phil Stone, initiated the largest position in Western New England Bancorp, Inc. (NASDAQ:WNEB). Fourthstone LLC had $0.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner’s Engineers Gate Manager, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Western New England Bancorp, Inc. (NASDAQ:WNEB) but similarly valued. We will take a look at Genasys Inc. (NASDAQ:GNSS), Shore Bancshares, Inc. (NASDAQ:SHBI), J. Jill, Inc. (NYSE:JILL), Tuscan Holdings Corp. II (NASDAQ:THCA), BayCom Corp (NASDAQ:BCML), The Bank of Princeton (NASDAQ:BPRN), and Second Sight Medical Products Inc (NASDAQ:EYES). This group of stocks’ market valuations match WNEB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GNSS | 12 | 24439 | 5 |
| SHBI | 10 | 41352 | 2 |
| JILL | 7 | 24694 | 3 |
| THCA | 13 | 65696 | -2 |
| BCML | 8 | 30516 | 4 |
| BPRN | 5 | 18576 | 3 |
| EYES | 6 | 4935 | 3 |
| Average | 8.7 | 30030 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $27 million in WNEB’s case. Tuscan Holdings Corp. II (NASDAQ:THCA) is the most popular stock in this table. On the other hand The Bank of Princeton (NASDAQ:BPRN) is the least popular one with only 5 bullish hedge fund positions. Western New England Bancorp, Inc. (NASDAQ:WNEB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WNEB is 71.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on WNEB as the stock returned 6.6% since the end of Q2 (through 9/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Western New England Bancorp Inc. (NASDAQ:WNEB)
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Disclosure: None. This article was originally published at Insider Monkey.
