Hedge Funds Are Crazy About CU Bancorp (CUNB)

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

CU Bancorp (NASDAQ:CUNB) investors should pay attention to an increase in hedge fund sentiment in recent months. CU Bancorp (NASDAQ:CUNB) was in 7 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with CU Bancorp (NASDAQ:CUNB) positions at the end of the previous quarter. It is important to consider that the shares of the company were up 1.35% during the quarter, however, that couldn’t be credited for the jump in hedge fund sentiment. We will find out more about the hedge funds holding stakes in CU Bancorp (NASDAQ:CUNB), at the end of September.

The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as The First of Long Island Corporation (NASDAQ:FLIC), Mechel OAO (ADR) (NYSE:MTL), and Primero Mining Corp (NYSE:PPP) to gather more data points.

In the 21st century investor’s toolkit there are plenty of gauges market participants put to use to analyze their holdings. Some of the most under-the-radar gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a solid amount (see the details here).

With all of this in mind, let’s go over the new action regarding CU Bancorp (NASDAQ:CUNB).

What does the smart money think about CU Bancorp (NASDAQ:CUNB)?

At the end of Q3, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 40% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Basswood Capital, managed by Matthew Lindenbaum, holds the number one position in CU Bancorp (NASDAQ:CUNB). Basswood Capital has a $28.1 million position in the stock, comprising 1.4% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $4.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism comprise Paul Hondros’s AlphaOne Capital Partners, Neil Chriss’ Hutchin Hill Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

As one would reasonably expect, key money managers have been driving this bullishness. AlphaOne Capital Partners established the most valuable position in CU Bancorp (NASDAQ:CUNB). AlphaOne Capital Partners had $1.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter.

Let’s check out hedge fund activity in other stocks similar to CU Bancorp (NASDAQ:CUNB). We will take a look at The First of Long Island Corporation (NASDAQ:FLIC), Mechel OAO (ADR) (NYSE:MTL), Primero Mining Corp (NYSE:PPP), and Modine Manufacturing Co. (NYSE:MOD). This group of stocks’ market caps match CU Bancorp (NASDAQ:CUNB)’s market cap.

As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $36 million in CU Bancorp (NASDAQ:CUNB)’s case. Modine Manufacturing Co. (NYSE:MOD) is the most popular stock in this table. On the other hand, The First of Long Island Corporation (NASDAQ:FLIC) is the least popular one with only 6 bullish hedge fund positions. CU Bancorp (NASDAQ:CUNB) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Modine Manufacturing Co. (NYSE:MOD) might be a better candidate to consider a long position.