Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 9 percentage points since the end of the third quarter of 2018 as investors worried over the possible ramifications of rising interest rates and escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Waterstone Financial, Inc. (NASDAQ:WSBF) and see how the stock is affected by the recent hedge fund activity.
Is Waterstone Financial, Inc. (NASDAQ:WSBF) a healthy stock for your portfolio? Money managers are getting more bullish. The number of bullish hedge fund positions advanced by 2 recently. Our calculations also showed that wsbf isn’t among the 30 most popular stocks among hedge funds. WSBF was in 11 hedge funds’ portfolios at the end of March. There were 9 hedge funds in our database with WSBF holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? 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 40 percentage points since May 2014 through May 30, 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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Price of MFP Investors
Let’s check out the key hedge fund action regarding Waterstone Financial, Inc. (NASDAQ:WSBF).
What does smart money think about Waterstone Financial, Inc. (NASDAQ:WSBF)?
At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards WSBF over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Waterstone Financial, Inc. (NASDAQ:WSBF), which was worth $35.9 million at the end of the first quarter. On the second spot was MFP Investors which amassed $16.4 million worth of shares. Moreover, Seidman Investment Partnership, Stadium Capital Management, and Driehaus Capital were also bullish on Waterstone Financial, Inc. (NASDAQ:WSBF), allocating a large percentage of their portfolios to this stock.
Now, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in Waterstone Financial, Inc. (NASDAQ:WSBF). Arrowstreet Capital had $0.9 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new WSBF position is John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s go over hedge fund activity in other stocks similar to Waterstone Financial, Inc. (NASDAQ:WSBF). We will take a look at Translate Bio, Inc. (NASDAQ:TBIO), Azure Power Global Limited (NYSE:AZRE), DBV Technologies S.A. (NASDAQ:DBVT), and SI-BONE, Inc. (NASDAQ:SIBN). This group of stocks’ market values are closest to WSBF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TBIO | 7 | 88688 | 0 |
| AZRE | 6 | 6684 | 0 |
| DBVT | 8 | 76647 | 3 |
| SIBN | 5 | 51415 | -4 |
| Average | 6.5 | 55859 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $76 million in WSBF’s case. DBV Technologies S.A. (NASDAQ:DBVT) is the most popular stock in this table. On the other hand SI-BONE, Inc. (NASDAQ:SIBN) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Waterstone Financial, Inc. (NASDAQ:WSBF) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately WSBF wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WSBF were disappointed as the stock returned 3.2% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
