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Were Hedge Funds Right About Dumping Bridge Bancorp, Inc. (BDGE) ?

Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Bridge Bancorp, Inc. (NASDAQ:BDGE).

Bridge Bancorp, Inc. (NASDAQ:BDGE) has experienced a decrease in hedge fund interest lately. Our calculations also showed that bdge isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Lindenbaum Basswood Capital

Let’s go over the latest hedge fund action surrounding Bridge Bancorp, Inc. (NASDAQ:BDGE).

How have hedgies been trading Bridge Bancorp, Inc. (NASDAQ:BDGE)?

At the end of the fourth quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in BDGE 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.

No of Hedge Funds with BDGE Positions

More specifically, Basswood Capital was the largest shareholder of Bridge Bancorp, Inc. (NASDAQ:BDGE), with a stake worth $61.4 million reported as of the end of December. Trailing Basswood Capital was Ulysses Management, which amassed a stake valued at $9.7 million. Renaissance Technologies, EJF Capital, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

Seeing as Bridge Bancorp, Inc. (NASDAQ:BDGE) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds who were dropping their full holdings by the end of the third quarter. Interestingly, Ken Fisher’s Fisher Asset Management dropped the biggest position of all the hedgies watched by Insider Monkey, totaling about $0.8 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund dropped about $0.4 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Bridge Bancorp, Inc. (NASDAQ:BDGE). These stocks are Enphase Energy Inc (NASDAQ:ENPH), Capitol Investment Corp. IV (NYSE:CIC), QCR Holdings, Inc. (NASDAQ:QCRH), and Gilat Satellite Networks Ltd. (NASDAQ:GILT). This group of stocks’ market valuations match BDGE’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENPH 18 93097 -1
CIC 14 162175 -1
QCRH 9 54385 1
GILT 2 26919 0
Average 10.75 84144 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $87 million in BDGE’s case. Enphase Energy Inc (NASDAQ:ENPH) is the most popular stock in this table. On the other hand Gilat Satellite Networks Ltd. (NASDAQ:GILT) is the least popular one with only 2 bullish hedge fund positions. Bridge Bancorp, Inc. (NASDAQ:BDGE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on BDGE, though not to the same extent, as the stock returned 21.3% and outperformed the market as well.

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

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