We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Civista Bancshares, Inc. (NASDAQ:CIVB) and determine whether hedge funds skillfully traded this stock.
Civista Bancshares, Inc. (NASDAQ:CIVB) investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that CIVB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a multitude of indicators shareholders can use to size up their holdings. Some of the most underrated indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce their index-focused peers by a very impressive margin (see the details here).
Jim Simons of Renaissance Technologies
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the latest hedge fund action encompassing Civista Bancshares, Inc. (NASDAQ:CIVB).
What does smart money think about Civista Bancshares, Inc. (NASDAQ:CIVB)?
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the fourth quarter of 2019. By comparison, 5 hedge funds held shares or bullish call options in CIVB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Castine Capital Management, managed by Paul Magidson, Jonathan Cohen. And Ostrom Enders, holds the biggest position in Civista Bancshares, Inc. (NASDAQ:CIVB). Castine Capital Management has a $5.5 million position in the stock, comprising 3% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $4.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include David Harding’s Winton Capital Management, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Castine Capital Management allocated the biggest weight to Civista Bancshares, Inc. (NASDAQ:CIVB), around 2.99% of its 13F portfolio. Seidman Investment Partnership is also relatively very bullish on the stock, setting aside 0.24 percent of its 13F equity portfolio to CIVB.
With a general bullishness amongst the heavyweights, some big names have jumped into Civista Bancshares, Inc. (NASDAQ:CIVB) headfirst. Bailard Inc, managed by Thomas Bailard, established the largest position in Civista Bancshares, Inc. (NASDAQ:CIVB). Bailard Inc had $0.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new CIVB position is Lawrence Seidman’s Seidman Investment Partnership.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Civista Bancshares, Inc. (NASDAQ:CIVB) but similarly valued. We will take a look at Consolidated Water Co. Ltd. (NASDAQ:CWCO), Cross Country Healthcare, Inc. (NASDAQ:CCRN), Magenta Therapeutics, Inc. (NASDAQ:MGTA), and CAI International Inc (NYSE:CAI). This group of stocks’ market valuations are similar to CIVB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CWCO | 5 | 14678 | 0 |
| CCRN | 13 | 19751 | 1 |
| MGTA | 10 | 32359 | 1 |
| CAI | 8 | 63669 | -3 |
| Average | 9 | 32614 | -0.25 |
View table here if you experience formatting issues.
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 $33 million. That figure was $13 million in CIVB’s case. Cross Country Healthcare, Inc. (NASDAQ:CCRN) is the most popular stock in this table. On the other hand Consolidated Water Co. Ltd. (NASDAQ:CWCO) is the least popular one with only 5 bullish hedge fund positions. Civista Bancshares, Inc. (NASDAQ:CIVB) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately CIVB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CIVB were disappointed as the stock returned 3.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
