Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Customers Bancorp Inc (NYSE:CUBI)? The smart money sentiment can provide an answer to this question.
Customers Bancorp Inc (NYSE:CUBI) has experienced an increase in support from the world’s most elite money managers lately. Our calculations also showed that CUBI isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a peek at the recent hedge fund action encompassing Customers Bancorp Inc (NYSE:CUBI).
Hedge fund activity in Customers Bancorp Inc (NYSE:CUBI)
At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CUBI over the last 14 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Third Avenue Management held the most valuable stake in Customers Bancorp Inc (NYSE:CUBI), which was worth $9.4 million at the end of the fourth quarter. On the second spot was GLG Partners which amassed $6.3 million worth of shares. Moreover, Millennium Management, Citadel Investment Group, and D E Shaw were also bullish on Customers Bancorp Inc (NYSE:CUBI), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers were leading the bulls’ herd. Third Avenue Management, managed by Martin Whitman, established the most valuable position in Customers Bancorp Inc (NYSE:CUBI). Third Avenue Management had $9.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.9 million investment in the stock during the quarter. The other funds with brand new CUBI positions are Minhua Zhang’s Weld Capital Management, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Customers Bancorp Inc (NYSE:CUBI) but similarly valued. We will take a look at Axcelis Technologies Inc (NASDAQ:ACLS), Bank of Marin Bancorp (NASDAQ:BMRC), Preferred Apartment Communities Inc. (NYSEAMEX:APTS), and Assembly Biosciences Inc (NASDAQ:ASMB). This group of stocks’ market caps are closest to CUBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACLS | 9 | 66860 | -4 |
| BMRC | 6 | 20250 | -1 |
| APTS | 2 | 547 | -1 |
| ASMB | 18 | 148368 | -2 |
| Average | 8.75 | 59006 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $32 million in CUBI’s case. Assembly Biosciences Inc (NASDAQ:ASMB) is the most popular stock in this table. On the other hand Preferred Apartment Communities Inc. (NYSEAMEX:APTS) is the least popular one with only 2 bullish hedge fund positions. Customers Bancorp Inc (NYSE:CUBI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on CUBI, though not to the same extent, as the stock returned 20.9% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.