Hedge Funds Aren’t Crazy About California Water Service Group (CWT) Anymore

California Water Service Group (NYSE:CWT) was in 5 hedge funds’ portfolio at the end of December. CWT has experienced a decrease in enthusiasm from smart money in recent months. There were 7 hedge funds in our database with CWT positions at the end of the previous quarter.

According to most investors, hedge funds are seen as worthless, old financial vehicles of years past. While there are over 8000 funds with their doors open at the moment, we choose to focus on the masters of this group, around 450 funds. It is estimated that this group has its hands on most of the hedge fund industry’s total asset base, and by keeping an eye on their top picks, we have revealed a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as important, positive insider trading sentiment is another way to parse down the financial markets. Just as you’d expect, there are many motivations for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would buy. Several academic studies have demonstrated the useful potential of this tactic if piggybackers know what to do (learn more here).

Consequently, it’s important to take a look at the key action regarding California Water Service Group (NYSE:CWT).

What does the smart money think about California Water Service Group (NYSE:CWT)?

In preparation for this year, a total of 5 of the hedge funds we track were long in this stock, a change of -29% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Millennium Management, managed by Israel Englander, holds the largest position in California Water Service Group (NYSE:CWT). Millennium Management has a $3.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $2.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Cliff Asness’s AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Mike Vranos’s Ellington.

Due to the fact that California Water Service Group (NYSE:CWT) has faced a declination in interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers who sold off their full holdings heading into 2013. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dumped the biggest position of the 450+ funds we key on, comprising an estimated $0.3 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund dumped about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into 2013.

How are insiders trading California Water Service Group (NYSE:CWT)?

Insider trading activity, especially when it’s bullish, is most useful when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, California Water Service Group (NYSE:CWT) has seen 20 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to California Water Service Group (NYSE:CWT). These stocks are The York Water Company (NASDAQ:YORW), Middlesex Water Company (NASDAQ:MSEX), Connecticut Water Service, Inc. (NASDAQ:CTWS), SJW Corp. (NYSE:SJW), and American States Water Co (NYSE:AWR). All of these stocks are in the water utilities industry and their market caps are closest to CWT’s market cap.