Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than the average investor, 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 FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) and see how the stock has been affected by the recent hedge fund activity.

FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) was in six hedge funds’ portfolios at the end of September. FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) has seen an increase in support from the world’s most elite money managers of late. There were five hedge funds in our database with FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) holdings at the end of the previous quarter. At the end of this article, we will also compare FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) to other stocks including TESSCO Technologies, Inc. (NASDAQ:TESS), Cidara Therapeutics Inc (NASDAQ:CDTX), and Inventure Foods Inc (NASDAQ:SNAK) to get a better sense of its popularity.

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According to most shareholders, hedge funds are viewed as worthless, old investment vehicles of the past. While there are over 8,000 funds trading at the moment, our experts hone in on the aristocrats of this group, about 700 funds. It is estimated that this group of investors direct the lion’s share of the smart money’s total asset base, and by keeping an eye on their finest picks, Insider Monkey has spotted various investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, let’s take a look at the recent action regarding FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW).

How have hedgies been trading FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW)?

At the end of Q3, a total of six of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 20% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies holds the number one position in FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW). Renaissance Technologies has a $6.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second-most bullish fund manager is Emanuel J. Friedman of EJF Capital, with a $3.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors, and D E Shaw.

Now, key money managers have been driving this bullishness. D E Shaw assembled the most valuable position in FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW). D E Shaw had $0.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.1 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) but similarly valued. These stocks are TESSCO Technologies, Inc. (NASDAQ:TESS), Cidara Therapeutics Inc (NASDAQ:CDTX), Inventure Foods Inc (NASDAQ:SNAK), and EMCORE Corporation (NASDAQ:EMKR). This group of stocks’ market values resemble FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TESS 6 26752 2
CDTX 10 52581 1
SNAK 6 11759 -4
EMKR 16 32005 4

As you can see these stocks had an average of ten hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $11 million in FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW)’s case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand, TESSCO Technologies, Inc. (NASDAQ:TESS) is the least popular one with only six bullish hedge fund positions. Compared to these stocks FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW) is even less popular than TESSCO Technologies, Inc. (NASDAQ:TESS). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.