Hedge Funds Are Souring On Blue Hills Bancorp Inc (BHBK)

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Blue Hills Bancorp Inc (NASDAQ:BHBK) was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. BHBK investors should pay attention to a decrease in support from the world’s most successful money managers in recent months. There were 16 hedge funds in our database with BHBK holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as One Liberty Properties, Inc. (NYSE:OLP), Stonegate Bank (NASDAQ:SGBK), and The First of Long Island Corporation (NASDAQ:FLIC) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about Blue Hills Bancorp Inc (NASDAQ:BHBK)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 13% drop from the second quarter of 2016. By comparison, 10 hedge funds held shares or bullish call options in BHBK heading into this year, so ownership of the stock is still up by 40% this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Emanuel J. Friedman’s EJF Capital has the biggest position in Blue Hills Bancorp Inc (NASDAQ:BHBK), worth close to $18.5 million, corresponding to 1.5% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, which holds a $10 million position. Remaining peers that are bullish encompass Jim Simons’ Renaissance Technologies, Lawrence Seidman’s Seidman Investment Partnership, and John D. Gillespie’s Prospector Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as Blue Hills Bancorp Inc (NASDAQ:BHBK) has sustained bearish sentiment from hedge fund managers, we can see that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Michael M. Rothenberg’s Moab Capital Partners dumped the biggest investment of all the hedgies followed by Insider Monkey, worth about $0.4 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund dumped about $0.1 million worth of shares.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Blue Hills Bancorp Inc (NASDAQ:BHBK) but similarly valued. These stocks are One Liberty Properties, Inc. (NYSE:OLP), Stonegate Bank (NASDAQ:SGBK), The First of Long Island Corporation (NASDAQ:FLIC), and EZCORP Inc (NASDAQ:EZPW). This group of stocks’ market caps resemble BHBK’s market cap.

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 $60 million. That figure was $48 million in BHBK’s case. EZCORP Inc (NASDAQ:EZPW) is the most popular stock in this table. On the other hand One Liberty Properties, Inc. (NYSE:OLP) is the least popular one with only 7 bullish hedge fund positions. Blue Hills Bancorp Inc (NASDAQ:BHBK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on recently. In this regard SGBK might be a better candidate to consider taking a long position in.

Disclosure: None