Is Dime Community Bancshares, Inc. (NASDAQ:DCOM) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Dime Community Bancshares, Inc. (NASDAQ:DCOM) was in 10 hedge funds’ portfolios at the end of the third quarter of 2019. DCOM has experienced an increase in hedge fund sentiment in recent months. There were 9 hedge funds in our database with DCOM holdings at the end of the previous quarter. Our calculations also showed that DCOM 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.
To the average investor there are a large number of tools investors can use to assess publicly traded companies. Some of the most innovative tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the market by a superb amount (see the details here).
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. Let’s take a glance at the recent hedge fund action encompassing Dime Community Bancshares, Inc. (NASDAQ:DCOM).
How are hedge funds trading Dime Community Bancshares, Inc. (NASDAQ:DCOM)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DCOM 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.
Among these funds, Polaris Capital Management held the most valuable stake in Dime Community Bancshares, Inc. (NASDAQ:DCOM), which was worth $20.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $14.7 million worth of shares. Prospector Partners, AQR Capital Management, 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 Polaris Capital Management allocated the biggest weight to Dime Community Bancshares, Inc. (NASDAQ:DCOM), around 0.9% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, designating 0.61 percent of its 13F equity portfolio to DCOM.
As one would reasonably expect, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Dime Community Bancshares, Inc. (NASDAQ:DCOM). Arrowstreet Capital had $0.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Dime Community Bancshares, Inc. (NASDAQ:DCOM) but similarly valued. These stocks are William Lyon Homes (NYSE:WLH), PetIQ, Inc. (NASDAQ:PETQ), Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), and Virtus Investment Partners Inc (NASDAQ:VRTS). This group of stocks’ market values are similar to DCOM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLH | 29 | 164043 | 5 |
| PETQ | 16 | 96449 | 3 |
| AXNX | 11 | 93838 | -1 |
| VRTS | 16 | 94591 | -1 |
| Average | 18 | 112230 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $42 million in DCOM’s case. William Lyon Homes (NYSE:WLH) is the most popular stock in this table. On the other hand Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Dime Community Bancshares, Inc. (NASDAQ:DCOM) is even less popular than AXNX. Hedge funds dodged a bullet by taking a bearish stance towards DCOM. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately DCOM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); DCOM investors were disappointed as the stock returned -5.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
