Broadway Financial Corporation (BYFC) Fell Out Of Favor With Hedge Funds

·5 min read

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Broadway Financial Corporation (NASDAQ:BYFC).

Broadway Financial Corporation (NASDAQ:BYFC) has seen a decrease in support from the world's most elite money managers of late. Broadway Financial Corporation (NASDAQ:BYFC) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 4. There were 4 hedge funds in our database with BYFC positions at the end of the fourth quarter. Our calculations also showed that BYFC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are dozens of gauges investors put to use to value their holdings. A couple of the most innovative gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the S&P 500 by a significant margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Emanuel J. Friedman
Emanuel J. Friedman

Emanuel Friedman of EJF Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to view the fresh hedge fund action surrounding Broadway Financial Corporation (NASDAQ:BYFC).

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

Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 1 hedge funds with a bullish position in BYFC a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Emanuel J. Friedman's EJF Capital has the largest position in Broadway Financial Corporation (NASDAQ:BYFC), worth close to $0.8 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Broadway Financial Corporation (NASDAQ:BYFC), around 0.06% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.0005 percent of its 13F equity portfolio to BYFC.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified BYFC as a viable investment and initiated a position in the stock.

Let's now review hedge fund activity in other stocks similar to Broadway Financial Corporation (NASDAQ:BYFC). These stocks are Comstock Holding Companies, Inc. (NASDAQ:CHCI), China Jo Jo Drugstores Inc (NASDAQ:CJJD), Air Industries Group (NYSE:AIRI), Elmira Savings Bank (NASDAQ:ESBK), Pintec Technology Holdings Limited (NASDAQ:PT), Forward Pharma A/S (NASDAQ:FWP), and Daxor Corporation (NYSE:DXR). This group of stocks' market values are closest to BYFC's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHCI,2,2312,-1 CJJD,6,7692,1 AIRI,1,69,-1 ESBK,1,166,0 PT,2,141,-1 FWP,3,4963,1 DXR,2,1740,0 Average,2.4,2440,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in BYFC's case. China Jo Jo Drugstores Inc (NASDAQ:CJJD) is the most popular stock in this table. On the other hand Air Industries Group (NYSE:AIRI) is the least popular one with only 1 bullish hedge fund positions. Broadway Financial Corporation (NASDAQ:BYFC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BYFC is 46.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on BYFC as the stock returned 23.3% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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