The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Berkshire Hills Bancorp, Inc. (NYSE:BHLB).
Berkshire Hills Bancorp, Inc. (NYSE:BHLB) investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that BHLB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the fresh hedge fund action encompassing Berkshire Hills Bancorp, Inc. (NYSE:BHLB).
How are hedge funds trading Berkshire Hills Bancorp, Inc. (NYSE:BHLB)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in BHLB a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Berkshire Hills Bancorp, Inc. (NYSE:BHLB), with a stake worth $10.1 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $2.9 million. EJF Capital, Arrowstreet Capital, 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 EJF Capital allocated the biggest weight to Berkshire Hills Bancorp, Inc. (NYSE:BHLB), around 0.53% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, dishing out 0.36 percent of its 13F equity portfolio to BHLB.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most outsized position in Berkshire Hills Bancorp, Inc. (NYSE:BHLB). Arrowstreet Capital had $1.7 million invested in the company at the end of the quarter. Anton Schutz’s Mendon Capital Advisors also initiated a $0.7 million position during the quarter. The other funds with brand new BHLB positions are Dmitry Balyasny’s Balyasny Asset Management, Greg Eisner’s Engineers Gate Manager, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Berkshire Hills Bancorp, Inc. (NYSE:BHLB) but similarly valued. We will take a look at National Bank Holdings Corp (NYSE:NBHC), I-Mab (NASDAQ:IMAB), Enterprise Financial Services Corp (NASDAQ:EFSC), and Model N Inc (NYSE:MODN). This group of stocks’ market valuations are closest to BHLB’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $23 million in BHLB’s case. Model N Inc (NYSE:MODN) is the most popular stock in this table. On the other hand I-Mab (NASDAQ:IMAB) is the least popular one with only 4 bullish hedge fund positions. Berkshire Hills Bancorp, Inc. (NYSE:BHLB) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately BHLB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BHLB were disappointed as the stock returned -27.9% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.