Hedge Funds Are Buying Anchor BanCorp Wisconsin Inc (DE) (ABCW)

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Anchor BanCorp Wisconsin Inc (DE) (NASDAQ:ABCW) was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. ABCW shareholders have witnessed an increase in hedge fund sentiment of late. There were 8 hedge funds in our database with ABCW holdings at the end of the previous quarter. At the end of this article we will also compare ABCW to other stocks, including Connecticut Water Service, Inc. (NASDAQ:CTWS), First Business Financial Services Inc (NASDAQ:FBIZ), and Clean Energy Fuels Corp (NASDAQ:CLNE) to get a better sense of its popularity.

According to most stock holders, hedge funds are seen as slow, old financial tools of years past. While there are more than an 8000 funds with their doors open at present, Our experts hone in on the moguls of this club, around 700 funds. It is estimated that this group of investors watch over the majority of the smart money’s total capital, and by tailing their inimitable stock picks, Insider Monkey has uncovered several investment strategies that have historically outperformed the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, let’s take a peek at the fresh action surrounding Anchor BanCorp Wisconsin Inc (DE) (NASDAQ:ABCW).

How have hedgies been trading Anchor BanCorp Wisconsin Inc (DE) (NASDAQ:ABCW)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the second quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, EJF Capital, managed by Emanuel J. Friedman, holds the number one position in Anchor BanCorp Wisconsin Inc (DE) (NASDAQ:ABCW). EJF Capital has a $30.7 million position in the stock, comprising 1.5% of its 13F portfolio. On EJF Capital’s heels is Basswood Capital, managed by Matthew Lindenbaum, which holds a $18.2 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain Michael Price’s MFP Investors, Robert I. Usdan and Wayne K. Goldstein’s Endicott Management and William Black’s Consector Capital.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the largest position in Anchor BanCorp Wisconsin Inc (DE) (NASDAQ:ABCW). Millennium Management had $0.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s go over hedge fund activity in other stocks similar to Anchor BanCorp Wisconsin Inc. (PINK:ABCW). These stocks are Connecticut Water Service, Inc. (NASDAQ:CTWS), First Business Financial Services Inc (NASDAQ:FBIZ), Clean Energy Fuels Corp (NASDAQ:CLNE), and Corcept Therapeutics Incorporated (NASDAQ:CORT). This group of stocks’ market values are similar to ABCW’s market value.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $8 million, which is considerably lower than the $111 million in ABCW’s case. Corcept Therapeutics Incorporated (NASDAQ:CORT) is the most popular stock in this table. On the other hand First Business Financial Services Inc (NASDAQ:FBIZ) is the least popular one with only 4 bullish hedge fund positions. Anchor BanCorp Wisconsin Inc (DE) (NASDAQ:ABCW) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CORT might be a better candidate to consider a long position.