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Is Wellesley Bancorp, Inc. (WEBK) Going to Burn These Hedge Funds?

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. What do these smart investors think about Wellesley Bancorp, Inc. (NASDAQ:WEBK)?

Is Wellesley Bancorp, Inc. (NASDAQ:WEBK) a buy here? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions were trimmed by 1 in recent months. Our calculations also showed that WEBK 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). WEBK was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 4 hedge funds in our database with WEBK positions at the end of the previous quarter.

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 51 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.

TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the fresh hedge fund action regarding Wellesley Bancorp, Inc. (NASDAQ:WEBK).

What does smart money think about Wellesley Bancorp, Inc. (NASDAQ:WEBK)?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in WEBK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Wellesley Bancorp, Inc. (NASDAQ:WEBK) was held by Beryl Capital Management, which reported holding $1.1 million worth of stock at the end of September. It was followed by Tudor Investment Corp with a $0.6 million position. The only other hedge fund that is bullish on the company was Prospector Partners.

Because Wellesley Bancorp, Inc. (NASDAQ:WEBK) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedgies who sold off their entire stakes in the third quarter. At the top of the heap, Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management said goodbye to the biggest position of all the hedgies followed by Insider Monkey, totaling an estimated $1.6 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also said goodbye to its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Wellesley Bancorp, Inc. (NASDAQ:WEBK) but similarly valued. We will take a look at Akorn, Inc. (NASDAQ:AKRX), Lumos Pharma, Inc. (NASDAQ:LUMO), Allied Healthcare Products, Inc. (NASDAQ:AHPI), and International Tower Hill Mines Ltd. (NYSE:THM). This group of stocks’ market caps match WEBK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKRX 12 13989 -2
LUMO 5 14519 0
AHPI 1 5000 0
THM 4 37049 0
Average 5.5 17639 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $2 million in WEBK’s case. Akorn, Inc. (NASDAQ:AKRX) is the most popular stock in this table. On the other hand Allied Healthcare Products, Inc. (NASDAQ:AHPI) is the least popular one with only 1 bullish hedge fund positions. Wellesley Bancorp, Inc. (NASDAQ:WEBK) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on WEBK as the stock returned 23.4% during the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.