Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Waterstone Financial, Inc. (NASDAQ:WSBF) changed recently.
Is WSBF a good stock to buy now? Waterstone Financial, Inc. (NASDAQ:WSBF) has experienced a decrease in support from the world’s most elite money managers lately. Waterstone Financial, Inc. (NASDAQ:WSBF) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. Our calculations also showed that WSBF 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. Keeping this in mind let’s take a look at the new hedge fund action surrounding Waterstone Financial, Inc. (NASDAQ:WSBF).
Do Hedge Funds Think WSBF Is A Good Stock To Buy Now?
At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards WSBF over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Waterstone Financial, Inc. (NASDAQ:WSBF), which was worth $30.9 million at the end of the third quarter. On the second spot was Driehaus Capital which amassed $10.1 million worth of shares. Stadium Capital Management, MFP Investors, and Prospector Partners 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 Stadium Capital Management allocated the biggest weight to Waterstone Financial, Inc. (NASDAQ:WSBF), around 4.31% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, setting aside 1.61 percent of its 13F equity portfolio to WSBF.
Since Waterstone Financial, Inc. (NASDAQ:WSBF) has faced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers who sold off their entire stakes by the end of the third quarter. Intriguingly, Roger Ibbotson’s Zebra Capital Management sold off the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $0.2 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $0.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Waterstone Financial, Inc. (NASDAQ:WSBF) but similarly valued. We will take a look at Duluth Holdings Inc. (NASDAQ:DLTH), Computer Programs & Systems, Inc. (NASDAQ:CPSI), Barrett Business Services, Inc. (NASDAQ:BBSI), Puma Biotechnology Inc (NYSE:PBYI), Carriage Services, Inc. (NYSE:CSV), Voyager Therapeutics, Inc. (NASDAQ:VYGR), and Jernigan Capital Inc (NYSE:JCAP). This group of stocks’ market values resemble WSBF’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 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $69 million in WSBF’s case. Puma Biotechnology Inc (NYSE:PBYI) is the most popular stock in this table. On the other hand Jernigan Capital Inc (NYSE:JCAP) is the least popular one with only 9 bullish hedge fund positions. Waterstone Financial, Inc. (NASDAQ:WSBF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WSBF is 24.9. 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. A small number of hedge funds were also right about betting on WSBF as the stock returned 19.3% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.