Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about Washington Trust Bancorp, Inc. (NASDAQ:WASH).
Is Washington Trust Bancorp, Inc. (NASDAQ:WASH) the right investment to pursue these days? Prominent investors are turning less bullish. The number of bullish hedge fund bets went down by 2 in recent months. Our calculations also showed that wash isn’t among the 30 most popular stocks among hedge funds. WASH was in 6 hedge funds’ portfolios at the end of December. There were 8 hedge funds in our database with WASH holdings at the end of the previous quarter.
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’ 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
Let’s go over the recent hedge fund action encompassing Washington Trust Bancorp, Inc. (NASDAQ:WASH).
What have hedge funds been doing with Washington Trust Bancorp, Inc. (NASDAQ:WASH)?
Heading into the first quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in WASH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Washington Trust Bancorp, Inc. (NASDAQ:WASH), with a stake worth $22.9 million reported as of the end of December. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $0.6 million. Two Sigma Advisors, AQR Capital Management, and PDT Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Washington Trust Bancorp, Inc. (NASDAQ:WASH) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few hedgies that decided to sell off their positions entirely heading into Q3. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cut the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $0.3 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund said goodbye to about $0.2 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Washington Trust Bancorp, Inc. (NASDAQ:WASH) but similarly valued. We will take a look at National Presto Industries Inc. (NYSE:NPK), Forrester Research, Inc. (NASDAQ:FORR), Independence Realty Trust Inc (NYSE:IRT), and Penn Virginia Corporation (NASDAQ:PVAC). This group of stocks’ market valuations match WASH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NPK | 13 | 94747 | 3 |
| FORR | 10 | 52714 | 1 |
| IRT | 9 | 50885 | -2 |
| PVAC | 16 | 274325 | -5 |
| Average | 12 | 118168 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $25 million in WASH’s case. Penn Virginia Corporation (NASDAQ:PVAC) is the most popular stock in this table. On the other hand Independence Realty Trust Inc (NYSE:IRT) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Washington Trust Bancorp, Inc. (NASDAQ:WASH) is even less popular than IRT. Hedge funds dodged a bullet by taking a bearish stance towards WASH. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WASH wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); WASH investors were disappointed as the stock returned 6.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
