Do Hedge Funds and Insiders Love Connecticut Water Service, Inc. (CTWS)?

Connecticut Water Service, Inc. (NASDAQ:CTWS) investors should be aware of a decrease in support from the world’s most elite money managers in recent months.

According to most shareholders, hedge funds are seen as slow, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, we hone in on the crème de la crème of this club, close to 450 funds. Most estimates calculate that this group oversees most of all hedge funds’ total capital, and by paying attention to their best stock picks, we have figured out a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as integral, optimistic insider trading activity is a second way to parse down the world of equities. There are a variety of motivations for an insider to cut shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this strategy if shareholders know where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action regarding Connecticut Water Service, Inc. (NASDAQ:CTWS).

How are hedge funds trading Connecticut Water Service, Inc. (NASDAQ:CTWS)?

In preparation for this quarter, a total of 6 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially.

According to our comprehensive database, John I. Dickerson’s Summit Global Management had the biggest position in Connecticut Water Service, Inc. (NASDAQ:CTWS), worth close to $3.4 million, accounting for 2.7% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $1.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, J. Alan Reid, Jr.’s Forward Management and Israel Englander’s Millennium Management.

Since Connecticut Water Service, Inc. (NASDAQ:CTWS) has faced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers who sold off their positions entirely at the end of the first quarter. Interestingly, Cliff Asness’s AQR Capital Management sold off the largest investment of all the hedgies we watch, valued at about $0.4 million in stock. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Connecticut Water Service, Inc. (NASDAQ:CTWS)

Insider buying is particularly usable when the company in question has experienced transactions within the past 180 days. Over the latest half-year time frame, Connecticut Water Service, Inc. (NASDAQ:CTWS) has seen 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Connecticut Water Service, Inc. (NASDAQ:CTWS). These stocks are Consolidated Water Co. Ltd. (NASDAQ:CWCO), Artesian Resources Corporation (NASDAQ:ARTNA), SJW Corp. (NYSE:SJW), The York Water Company (NASDAQ:YORW), and Middlesex Water Company (NASDAQ:MSEX). This group of stocks are in the water utilities industry and their market caps resemble CTWS’s market cap.

With the returns exhibited by the aforementioned studies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Connecticut Water Service, Inc. (NASDAQ:CTWS) is an important part of this process.

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