Hrnetgroup Limited (Changes In Interest - Simco Global Ltd. And Butterfield Trust (Asia) Limited)

Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on. But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.

The downside that can come from buying these securities is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. That said, here is one small-cap stock that could be the next big thing and two best left ignored.

Two Small-Cap Stocks to Sell:

Exact Sciences (EXAS)

Market Cap: $7.90 billion

With a mission to detect cancer earlier when it's more treatable, Exact Sciences develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.

Why Does EXAS Fall Short?

• Cash-burning history makes us doubt the long-term viability of its business model
• Negative returns on capital show management lost money while trying to expand the business

Exact Sciences’s stock price of $41.78 implies a valuation ratio of 56.8x forward P/E. Check out our free in-depth research report to learn more about why EXAS doesn’t pass our bar.

Butterfield Bank (NTB)

Market Cap: $1.85 billion

Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.

Why Do We Think Twice About NTB?

• Muted 1.4% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
• Projected net interest income decline of 42.5% for the next 12 months points to a tough demand environment ahead
• Net interest margin of 2.7% reflects its high servicing and capital costs

At $45.09 per share, Butterfield Bank trades at 1.6x forward P/B. If you’re considering NTB for your portfolio, see our FREE research report to learn more.

One Small-Cap Stock to Buy:

Remitly (RELY)

Market Cap: $4 billion

With Amazon founder Jeff Bezos as an early investor, Remitly is an online platform that enables consumers to safely and quickly send money globally.

Why Should You Buy RELY?

• Has the opportunity to boost monetization through new features and premium offerings as its active customers have grown by 34.5% annually over the last two years
• Incremental sales over the last three years have been highly profitable as its earnings per share increased by 76.4% annually, topping its revenue gains
• Free cash flow margin expanded by 33.7 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends

Remitly is trading at $19.37 per share, or 18x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return).

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

Offshore banking group Butterfield Bank fell short of the market’s revenue expectations in Q2 CY2025 as sales rose 2.4% year on year to $146.5 million. Its non-GAAP profit of $1.26 per share was 3.3% above analysts’ consensus estimates.

Is now the time to buy NTB? Find out in our full research report (it’s free).

Butterfield Bank (NTB) Q2 CY2025 Highlights:

• Revenue: $146.5 million vs analyst estimates of $147.6 million (2.4% year-on-year growth, 0.7% miss)
• Adjusted EPS: $1.26 vs analyst estimates of $1.22 (3.3% beat)
• Adjusted Operating Income: $54.8 million (37.4% margin, 4.8% year-on-year growth)
• Market Capitalization: $1.85 billion

StockStory’s Take

Butterfield Bank’s second quarter results were marked by positive market reaction, reflecting investor approval of its higher adjusted earnings despite a small revenue miss versus Wall Street expectations. Management credited the performance to stable net interest income, disciplined expense management, and increased fee income from wealth management and trust services. CEO Michael Collins cited Butterfield’s “focus on sustainable profitability and creating shareholder value,” highlighting the franchise’s resilience within its core offshore markets. The quarter also saw an improved credit profile as nonaccrual loans declined and the allowance for credit losses remained steady.

Looking ahead, Butterfield Bank’s outlook centers on balancing capital returns with potential M&A activity, while navigating interest rate uncertainty and evolving deposit behaviors. Management noted ongoing discussions regarding acquisitions in the private trust sector but emphasized a disciplined approach amid competition from private equity. CFO Craig Bridgewater cautioned that while deposit costs may edge lower, reductions will be slower as the interest rate cycle matures. CEO Michael Collins said, “We just felt that we needed to rebalance in terms of just paying a bit more on the dividend side as opposed to doing 70% of it on share buybacks.”

Key Insights from Management’s Remarks

Management attributed the quarter’s results to steady net interest income, stable asset quality, and a rebalancing of capital return priorities in response to external market dynamics.

• Net interest income stability: Butterfield’s net interest income benefited from higher average interest-earning assets, though this was partially offset by lower yields on treasury assets. CFO Craig Bridgewater said the bank maintained its conservative investment approach, reinvesting in a blend of U.S. agency mortgage-backed securities and medium-term treasuries to manage rate risk.

• Fee income diversification: Trust and wealth management fees saw positive contributions driven by annual fee increases, repricing of acquired relationships, and successful onboarding of new clients. This growth helped offset seasonal declines in merchant and foreign exchange fees, reflecting the bank’s strategy to diversify revenue sources beyond traditional lending.

• Expense control with FX impact: Total noninterest expenses rose due to the strengthening British pound against the U.S. dollar and higher performance-based accruals. However, management reiterated its commitment to keeping quarterly core expenses within its guided range, noting the ongoing monitoring of inflation and currency fluctuations across its jurisdictions.

• Asset quality improvement: The quarter saw reduced nonaccrual loans, as Butterfield recovered previously troubled commercial loans in Bermuda. The loan portfolio remains heavily weighted toward conservative residential mortgages, with over 80% of balances at low loan-to-value ratios, supporting the bank’s low risk profile.

• Capital return strategy shift: Butterfield announced a 14% increase to its quarterly dividend and a new share repurchase program. Management explained this move as a rebalancing of capital return priorities, reflecting a desire to increase recurring cash returns to shareholders while retaining flexibility for future M&A opportunities.

Drivers of Future Performance

Butterfield’s future performance will hinge on prudent capital deployment, disciplined expense management, and the ability to adapt to shifting interest rate and competitive dynamics.

• M&A discipline in trust sector: Management underscored ongoing acquisition discussions in private trust and fund administration, but maintained a disciplined pricing approach. CEO Michael Collins noted, “We’re not going to pay the prices that private equity funds pay,” indicating Butterfield will only pursue accretive deals that strengthen long-term fee income and reduce reliance on net interest earnings.

• Interest rate and deposit cost headwinds: The executive team expects further, but slowing, reductions in deposit costs as the interest rate environment evolves. Bridgewater indicated that future declines in deposit costs will be limited, reflecting a maturing rate cycle and high starting point. The bank’s modest asset sensitivity means net interest margin could flatten if short-term rates fall, presenting a risk to earnings.

• Capital flexibility for growth: With capital ratios elevated following recent regulatory changes and debt redemption, Butterfield is positioned to fund future M&A without needing to raise equity. Management plans to gradually reduce capital levels through a combination of dividends, share repurchases, and selective acquisitions, while maintaining readiness for unpredictable macroeconomic and regulatory shifts.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) Butterfield’s progress in executing accretive M&A, particularly in private trust and fund administration; (2) the pace at which capital ratios are normalized through dividends, buybacks, and deal activity; and (3) management’s ability to sustain noninterest income growth amid evolving fee and market dynamics. Monitoring shifts in interest rates and deposit flows will also be critical for assessing future margin trends.

Butterfield Bank currently trades at $45.09, up from $44.52 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

High Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return).

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.

The stocks featured in this article have all approached their 52-week highs. When these price levels hit, it typically signals strong business execution, positive market sentiment, or significant industry tailwinds.

While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. Keeping that in mind, here are three overhyped stocks that may correct and some you should consider instead.

Caterpillar (CAT)

One-Month Return: +0.4%

With its iconic yellow machinery working on construction sites, Caterpillar manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Are We Cautious About CAT?

• Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
• Projected sales growth of 4.4% for the next 12 months suggests sluggish demand
• Earnings growth underperformed the sector average over the last two years as its EPS grew by just 2.7% annually

At $407.40 per share, Caterpillar trades at 20.5x forward P/E. Check out our free in-depth research report to learn more about why CAT doesn’t pass our bar.

Lemonade (LMND)

One-Month Return: +30.4%

Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.

Why Are We Wary of LMND?

• Earnings per share were flat over the last four years and fell short of the peer group average
• Annual book value per share declines of 183% for the past five years show its capital management struggled during this cycle
• Negative return on equity shows management lost money while trying to expand the business

Lemonade is trading at $52.50 per share, or 8.4x forward P/B. Read our free research report to see why you should think twice about including LMND in your portfolio.

Butterfield Bank (NTB)

One-Month Return: -3.9%

Founded in 1784 as one of the oldest banks in the Western Hemisphere, Butterfield Bank provides banking, wealth management, and trust services to individuals and businesses in select offshore financial centers including Bermuda, Cayman Islands, and the Channel Islands.

Why Are We Hesitant About NTB?

• Net interest income trends were unexciting over the last five years as its 1.4% annual growth was below the typical bank company
• Estimated net interest income decline of 42.5% for the next 12 months implies a challenging demand environment
• Net interest margin of 2.7% is well below other banks, signaling its loans aren’t very profitable

Butterfield Bank’s stock price of $44.90 implies a valuation ratio of 1.6x forward P/B. Dive into our free research report to see why there are better opportunities than NTB.

High-Quality Stocks for All Market Conditions

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return).

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.