Where Do Hedge Funds Stand On Bankwell Financial Group, Inc. (BWFG)?

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 Bankwell Financial Group, Inc. (NASDAQ:BWFG) changed recently.

Hedge fund interest in Bankwell Financial Group, Inc. (NASDAQ:BWFG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that BWFG 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Orgenesis Inc. (NASDAQ:ORGS), Vista Gold Corp. (NYSE:VGZ), and InflaRx N.V. (NASDAQ:IFRX) to gather more data points.

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

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

Fred Cummings of Elizabeth Park Capital

Fred Cummings of Elizabeth Park Capital

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 we’re going to check out the new hedge fund action regarding Bankwell Financial Group, Inc. (NASDAQ:BWFG).

What does smart money think about Bankwell Financial Group, Inc. (NASDAQ:BWFG)?

At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 6 hedge funds with a bullish position in BWFG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BWFG A Good Stock To Buy?

More specifically, Seidman Investment Partnership was the largest shareholder of Bankwell Financial Group, Inc. (NASDAQ:BWFG), with a stake worth $9.9 million reported as of the end of September. Trailing Seidman Investment Partnership was Endicott Management, which amassed a stake valued at $9 million. Renaissance Technologies, Solas Capital Management, and Elizabeth Park Capital Management 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 Seidman Investment Partnership allocated the biggest weight to Bankwell Financial Group, Inc. (NASDAQ:BWFG), around 15.19% of its 13F portfolio. Endicott Management is also relatively very bullish on the stock, designating 12.38 percent of its 13F equity portfolio to BWFG.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to Bankwell Financial Group, Inc. (NASDAQ:BWFG). We will take a look at Orgenesis Inc. (NASDAQ:ORGS), Vista Gold Corp. (NYSE:VGZ), InflaRx N.V. (NASDAQ:IFRX), Sierra Oncology, Inc. (NASDAQ:SRRA), La Jolla Pharmaceutical Company (NASDAQ:LJPC), Willis Lease Finance Corporation (NASDAQ:WLFC), and Ambow Education Holding Ltd. (NYSE:AMBO). This group of stocks’ market caps are closest to BWFG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ORGS 2 3210 -4
VGZ 2 20819 -1
IFRX 6 8306 -5
SRRA 11 51075 2
LJPC 6 42200 -2
WLFC 3 72776 1
AMBO 1 384 0
Average 4.4 28396 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.4 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $24 million in BWFG’s case. Sierra Oncology, Inc. (NASDAQ:SRRA) is the most popular stock in this table. On the other hand Ambow Education Holding Ltd. (NYSE:AMBO) is the least popular one with only 1 bullish hedge fund positions. Bankwell Financial Group, Inc. (NASDAQ:BWFG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BWFG is 60. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on BWFG as the stock returned 30.3% since the end of Q3 (through 11/27) 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.