Is DCOM A Good Stock To Buy Now?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Dime Community Bancshares, Inc. (NASDAQ:DCOM).

Is DCOM a good stock to buy now? Prominent investors were taking a pessimistic view. The number of long hedge fund positions were cut by 2 recently. Dime Community Bancshares, Inc. (NASDAQ:DCOM) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 15. Our calculations also showed that DCOM 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most stock holders, hedge funds are perceived as worthless, outdated investment vehicles of years past. While there are over 8000 funds in operation today, Our researchers choose to focus on the crème de la crème of this group, around 850 funds. These hedge fund managers shepherd the majority of the smart money’s total capital, and by following their first-class equity investments, Insider Monkey has formulated a few investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Bernard Horn of Polaris Capital Management

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. With all of this in mind let’s view the latest hedge fund action surrounding Dime Community Bancshares, Inc. (NASDAQ:DCOM).

Do Hedge Funds Think DCOM Is A Good Stock To Buy Now?

At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in DCOM a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Dime Community Bancshares, Inc. (NASDAQ:DCOM) was held by Polaris Capital Management, which reported holding $10.8 million worth of stock at the end of September. It was followed by Basswood Capital with a $9.8 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Ulysses Management. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to Dime Community Bancshares, Inc. (NASDAQ:DCOM), around 0.81% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, designating 0.53 percent of its 13F equity portfolio to DCOM.

Since Dime Community Bancshares, Inc. (NASDAQ:DCOM) has experienced a decline in interest from the smart money, it’s safe to say that there is a sect of money managers who sold off their positions entirely last quarter. It’s worth mentioning that David Harding’s Winton Capital Management sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $2.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Dime Community Bancshares, Inc. (NASDAQ:DCOM) but similarly valued. These stocks are Thermon Group Holdings, Inc. (NYSE:THR), Kamada Ltd (NASDAQ:KMDA), Valhi, Inc. (NYSE:VHI), WiMi Hologram Cloud Inc. (NASDAQ:WIMI), Wins Finance Holdings Inc. (NASDAQ:WINS), Tejon Ranch Company (NYSE:TRC), and Vermilion Energy Inc (NYSE:VET). All of these stocks’ market caps resemble DCOM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
THR 14 24686 2
KMDA 6 13143 4
VHI 3 3064 -1
WIMI 3 1363 1
WINS 1 510 0
TRC 13 51914 2
VET 6 8820 -2
Average 6.6 14786 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.6 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $38 million in DCOM’s case. Thermon Group Holdings, Inc. (NYSE:THR) is the most popular stock in this table. On the other hand Wins Finance Holdings Inc. (NASDAQ:WINS) is the least popular one with only 1 bullish hedge fund positions. Dime Community Bancshares, Inc. (NASDAQ:DCOM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DCOM is 63.5. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on DCOM as the stock returned 40.8% since the end of Q3 (through 12/8) 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.