Hedge Funds Are Selling Citizens Community Bancorp Inc. (CZWI)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Citizens Community Bancorp Inc. (NASDAQ:CZWI).

Is Citizens Community Bancorp Inc. (NASDAQ:CZWI) an attractive investment right now? The smart money was becoming less hopeful. The number of bullish hedge fund bets fell by 1 lately. Citizens Community Bancorp Inc. (NASDAQ:CZWI) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. Our calculations also showed that CZWI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 5 hedge funds in our database with CZWI positions at the end of the fourth quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Phil Stone of Fourthstone LLC

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s go over the fresh hedge fund action surrounding Citizens Community Bancorp Inc. (NASDAQ:CZWI).

Do Hedge Funds Think CZWI Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CZWI over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, 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, Fourthstone LLC, managed by Phil Stone, holds the number one position in Citizens Community Bancorp Inc. (NASDAQ:CZWI). Fourthstone LLC has a $11.4 million position in the stock, comprising 5.7% of its 13F portfolio. On Fourthstone LLC’s heels is Tontine Asset Management, led by Jeffrey Gendell, holding a $3.5 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Renaissance Technologies, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Citizens Community Bancorp Inc. (NASDAQ:CZWI), around 5.65% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, earmarking 0.37 percent of its 13F equity portfolio to CZWI.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: EJF Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified CZWI as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Citizens Community Bancorp Inc. (NASDAQ:CZWI) but similarly valued. These stocks are GasLog Partners LP (NYSE:GLOP), SB Financial Group, Inc. (NASDAQ:SBFG), Envela Corporation (NYSE:ELA), Hawthorn Bancshares, Inc. (NASDAQ:HWBK), Middlefield Banc Corp. (NASDAQ:MBCN), Vislink Technologies, Inc. (NASDAQ:VISL), and Blueknight Energy Partners L.P. (NASDAQ:BKEP). This group of stocks’ market caps are similar to CZWI’s market cap.

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As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $15 million in CZWI’s case. GasLog Partners LP (NYSE:GLOP) is the most popular stock in this table. On the other hand Hawthorn Bancshares, Inc. (NASDAQ:HWBK) is the least popular one with only 2 bullish hedge fund positions. Citizens Community Bancorp Inc. (NASDAQ:CZWI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CZWI is 37.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on CZWI as the stock returned 10.3% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.