Water is known to play a critical role in protein folding and stability. Here we develop and employ a coarse-grained (CG) model to directly explore the role of water in shaping the conformational landscape explored during protein folding. For this purpose, we simulate a designed sequence with binary patterning of neutral and hydrophobic residues, which is capable of folding to a three-helix bundle in explicit water. We find two folded states of this sequence, with rotation of the helices occurring to trade between hydrophobic packing and water expulsion from the core. This work provides insight into the role of water and hydrophobicity in generating competing folded states for a protein.