Is BHLB A Good Stock To Buy Now?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Berkshire Hills Bancorp, Inc. (NYSE:BHLB) based on that data.

Is BHLB a good stock to buy now? Berkshire Hills Bancorp, Inc. (NYSE:BHLB) was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 17. BHLB shareholders have witnessed a decrease in hedge fund interest lately. There were 17 hedge funds in our database with BHLB positions at the end of the second quarter. 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 for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 66 percentage points since March 2017 (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.

Phil Stone of Fourthstone LLC

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s go over the new hedge fund action regarding Berkshire Hills Bancorp, Inc. (NYSE:BHLB).

Do Hedge Funds Think BHLB Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in BHLB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fourthstone LLC held the most valuable stake in Berkshire Hills Bancorp, Inc. (NYSE:BHLB), which was worth $4.7 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $3.2 million worth of shares. D E Shaw, Renaissance Technologies, and Citadel Investment Group 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 Fourthstone LLC allocated the biggest weight to Berkshire Hills Bancorp, Inc. (NYSE:BHLB), around 3.95% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, designating 0.92 percent of its 13F equity portfolio to BHLB.

Judging by the fact that Berkshire Hills Bancorp, Inc. (NYSE:BHLB) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of money managers that elected to cut their entire stakes last quarter. Intriguingly, Israel Englander’s Millennium Management dropped the largest position of all the hedgies tracked by Insider Monkey, valued at about $7.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $1.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Berkshire Hills Bancorp, Inc. (NYSE:BHLB). These stocks are United Fire Group, Inc. (NASDAQ:UFCS), Banc of California, Inc. (NYSE:BANC), PBF Logistics LP (NYSE:PBFX), U.S. Lime & Minerals Inc. (NASDAQ:USLM), TORM plc (NASDAQ:TRMD), Community Health Systems, Inc. (NYSE:CYH), and IVERIC bio, Inc. (NASDAQ:ISEE). This group of stocks’ market values resemble BHLB’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $21 million in BHLB’s case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand PBF Logistics LP (NYSE:PBFX) is the least popular one with only 3 bullish hedge fund positions. Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHLB is 45.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on BHLB as the stock returned 84% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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