We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Bridgewater Bancshares, Inc. (NASDAQ:BWB) based on that data.
Is Bridgewater Bancshares, Inc. (NASDAQ:BWB) a buy right now? The best stock pickers were becoming less confident. The number of bullish hedge fund bets decreased by 3 recently. Bridgewater Bancshares, Inc. (NASDAQ:BWB) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 10. Our calculations also showed that BWB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 9 hedge funds in our database with BWB holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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’ 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 66 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s go over the fresh hedge fund action regarding Bridgewater Bancshares, Inc. (NASDAQ:BWB).
What does smart money think about Bridgewater Bancshares, Inc. (NASDAQ:BWB)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in BWB over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, EJF Capital held the most valuable stake in Bridgewater Bancshares, Inc. (NASDAQ:BWB), which was worth $12.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $5.6 million worth of shares. Arrowstreet Capital, Winton Capital Management, and Two Sigma Advisors 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 Bridgewater Bancshares, Inc. (NASDAQ:BWB), around 1.02% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to BWB.
Judging by the fact that Bridgewater Bancshares, Inc. (NASDAQ:BWB) has experienced declining sentiment from hedge fund managers, we can see that there was a specific group of funds that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Paul Hondros’s AlphaOne Capital Partners dropped the largest position of the “upper crust” of funds followed by Insider Monkey, valued at about $0.5 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Bridgewater Bancshares, Inc. (NASDAQ:BWB) but similarly valued. These stocks are Yiren Digital Ltd. (NYSE:YRD), Preferred Apartment Communities Inc. (NYSE:APTS), Hess Midstream LP (NYSE:HESM), IBEX Limited (NASDAQ:IBEX), Hebron Technology Co., Ltd. (NASDAQ:HEBT), Tidewater Inc. (NYSE:TDW), and Pluristem Therapeutics Inc. (NASDAQ:PSTI). This group of stocks’ market values match BWB’s market value.
|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 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $20 million in BWB’s case. Preferred Apartment Communities Inc. (NYSE:APTS) is the most popular stock in this table. On the other hand Hebron Technology Co., Ltd. (NASDAQ:HEBT) is the least popular one with only 1 bullish hedge fund positions. Bridgewater Bancshares, Inc. (NASDAQ:BWB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BWB is 47.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on BWB as the stock returned 26.4% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.