In this article we are going to use hedge fund sentiment as a tool and determine whether Western New England Bancorp, Inc. (NASDAQ:WNEB) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Western New England Bancorp, Inc. (NASDAQ:WNEB) a buy here? Prominent investors were betting on the stock. The number of bullish hedge fund bets advanced by 2 in recent months. Western New England Bancorp, Inc. (NASDAQ:WNEB) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 6. Our calculations also showed that WNEB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 3 hedge funds in our database with WNEB holdings at the end of December.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Chuck Royce
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to go over the recent hedge fund action surrounding Western New England Bancorp, Inc. (NASDAQ:WNEB).
Do Hedge Funds Think WNEB Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WNEB over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the number one position in Western New England Bancorp, Inc. (NASDAQ:WNEB). Renaissance Technologies has a $14.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, managed by Chuck Royce, which holds a $5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Western New England Bancorp, Inc. (NASDAQ:WNEB), around 0.03% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to WNEB.
As one would reasonably expect, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in Western New England Bancorp, Inc. (NASDAQ:WNEB). Arrowstreet Capital had $0.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.2 million investment in the stock during the quarter.
Let's also examine hedge fund activity in other stocks similar to Western New England Bancorp, Inc. (NASDAQ:WNEB). We will take a look at Capital Product Partners L.P. (NASDAQ:CPLP), Weyco Group, Inc. (NASDAQ:WEYS), Hycroft Mining Holding Corporation (NASDAQ:HYMC), Wrap Technologies, Inc. (NASDAQ:WRAP), International Tower Hill Mines Ltd (NYSE:THM), Savara, Inc. (NASDAQ:SVRA), and Equillium, Inc. (NASDAQ:EQ). All of these stocks' market caps match WNEB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPLP,5,2521,3 WEYS,2,1513,1 HYMC,18,192969,0 WRAP,4,2809,0 THM,4,108655,-1 SVRA,10,29388,3 EQ,7,17138,2 Average,7.1,50713,1.1 [/table]
As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $22 million in WNEB's case. Hycroft Mining Holding Corporation (NASDAQ:HYMC) is the most popular stock in this table. On the other hand Weyco Group, Inc. (NASDAQ:WEYS) is the least popular one with only 2 bullish hedge fund positions. Western New England Bancorp, Inc. (NASDAQ:WNEB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WNEB is 41.4. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately WNEB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WNEB investors were disappointed as the stock returned -4.4% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
