Although we witnessed a quiet holiday-shortened session on Friday, several hedge funds were busy reporting changes to some of their most notable positions. This article will discuss two such moves, submitted through filings with the SEC during the post-Thanksgiving session by two hedge fund firms monitored by Insider Monkey.
We’ll start with the 13D filing from Firefly Value Partners, founded by Ryan Heslop and Ariel Warszawski, which reported that that the firm sold its entire stake of 421,770 shares in Associated Banc Corp (NYSE:ASB) on November 19 at a price of $26.50 per share. The value-oriented hedge fund first filed a 13D related to its investment in the company at the beginning of August, in which it stated that a potential sale of the regional bank would represent the best alternative to maximize shareholder value. However, it appears that Firefly Value Partners abandoned the idea of pushing for a sale and cashed out its position in the bank at break-even or higher. Shares of Associated Banc Corp (NYSE:ASB) have been on a steady uptrend since the end of August, advancing by at least 13% over the past three-month period. At the same time, the regional bank delivered a strong financial performance in the third quarter, with its credit quality improving significantly quarter-over-quarter. The bank’s non-accrual loans were down by 8% quarter-over-quarter, while its net charge-offs decreased by 8% compared to the second quarter of 2015. Similarly, its net interest income increased by 2% quarter-over-quarter to $171 million. The regional bank holding company has seen its stock advance by 10% this year, and it is still trading at an attractive trailing price-to-earnings ratio of 16.56. This compares with a ratio of 23.18 for the companies included in the S&P 500 Index.
The smart money sentiment towards the stock did not change significantly during the third quarter, as the number of hedge fund firms in our database which were invested in the company climbed to 12 from 11 quarter-over-quarter. These hedge funds amassed 5.30% of the company’s shares on September 30, while the value of their investments grew to $142.83 million from $127.67 million sequentially. Israel Englander’s Millennium Management holds a 2.46 million-share position in Associated Banc Corp (NYSE:ASB) as of the end of the third quarter.
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We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
Let’s head to the next page of the article, where we discuss the filing submitted by 40 North Management.
According to a Schedule 13G filed with the SEC, 40 North Management, founded by David S. Winter and David J. Millstone, owns 2.87 million shares of The Rubicon Project Inc. (NYSE:RUBI), accounting for 6.5% of the company’s outstanding common stock. This compares with the 1.12 million-share position revealed through the latest round of 13Fs. The technology company that pursues its underlying mission of automating the buying and selling of advertising has seen its stock decline by 8% thus far in 2015. The digital advertising market is very competitive, while the increasing concentration of advertising spending may hinder Rubicon from delivering its much-awaited growth in the upcoming years. The Rubicon Project Inc. (NYSE:RUBI) offers a scalable platform that provides an automated advertising solution for both buyers and sellers in the digital advertising space, and acts more like an intermediary market that matches supply with demand. The company reported revenue of $64.3 million for the third quarter, compared with $32.2 million reported last year. This denotes an increase of 100% year-over-year, so Rubicon has been quite successful in sustaining high levels of demand and growing market acceptance for its platform. The company’s managed revenue, which is an operational measure that represents the advertising spending transacted on its platform, reached $244.4 million for the third quarter, up from $168.2 million registered in the same period of last year.
The technology company has been registering losses over the past several quarters, but analysts anticipate Rubicon to post profits in the next fiscal year. The number of hedge funds tracked by Insider Monkey with positions in the company climbed to 19 from 17 during the third quarter, while the value of these positions increased to $71.42 million from $58.49 million quarter-over-quarter. It is also worth mentioning that these investment vehicles accumulated 11.20% of the company’s shares on September 30. Donald Chiboucis’ Columbus Circle Investors acquired a 387,618-share stake in The Rubicon Project Inc. (NYSE:RUBI) during the September quarter.
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