Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Bankwell Financial Group, Inc. (NASDAQ:BWFG).
Bankwell Financial Group, Inc. (NASDAQ:BWFG) was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. BWFG investors should be aware of an increase in hedge fund interest lately. There were 5 hedge funds in our database with BWFG holdings at the end of the previous quarter. Our calculations also showed that BWFG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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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 as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s analyze the latest hedge fund action encompassing Bankwell Financial Group, Inc. (NASDAQ:BWFG).
What does smart money think about Bankwell Financial Group, Inc. (NASDAQ:BWFG)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BWFG over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Lawrence Seidman’s Seidman Investment Partnership has the number one position in Bankwell Financial Group, Inc. (NASDAQ:BWFG), worth close to $19.3 million, accounting for 17.5% of its total 13F portfolio. The second largest stake is held by Endicott Management, led by Robert I. Usdan and Wayne K. Goldstein, holding a $17.5 million position; the fund has 15.7% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Renaissance Technologies, Fred Cummings’s Elizabeth Park Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to Bankwell Financial Group, Inc. (NASDAQ:BWFG), around 17.5% of its 13F portfolio. Endicott Management is also relatively very bullish on the stock, setting aside 15.69 percent of its 13F equity portfolio to BWFG.
Consequently, specific money managers have been driving this bullishness. Bourgeon Capital, managed by John Zaro, initiated the most valuable position in Bankwell Financial Group, Inc. (NASDAQ:BWFG). Bourgeon Capital had $0.2 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 Bankwell Financial Group, Inc. (NASDAQ:BWFG) but similarly valued. We will take a look at Tuscan Holdings Corp. II (NASDAQ:THCA), Saratoga Investment Corp (NYSE:SAR), Castle Brands Inc (NYSE:ROX), and Civeo Corporation (NYSE:CVEO). This group of stocks’ market values are closest to BWFG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| THCA | 9 | 31142 | 9 |
| SAR | 5 | 6996 | 3 |
| ROX | 9 | 8244 | 5 |
| CVEO | 13 | 84856 | 0 |
| Average | 9 | 32810 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $45 million in BWFG’s case. Civeo Corporation (NYSE:CVEO) is the most popular stock in this table. On the other hand Saratoga Investment Corp (NYSE:SAR) is the least popular one with only 5 bullish hedge fund positions. Bankwell Financial Group, Inc. (NASDAQ:BWFG) 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 BWFG, though not to the same extent, as the stock returned 7% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
