How CU Bancorp (CUNB) Stacks Up Against Its Peers

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on CU Bancorp (NASDAQ:CUNB).

CU Bancorp (NASDAQ:CUNB) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios 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 Green Bancorp Inc (NASDAQ:GNBC), First Defiance Financial (NASDAQ:FDEF), and Blue Nile Inc (NASDAQ:NILE) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Keeping this in mind, let’s take a look at the latest action encompassing CU Bancorp (NASDAQ:CUNB).

How are hedge funds trading CU Bancorp (NASDAQ:CUNB)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CUNB over the last 5 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Matthew Lindenbaum’s Basswood Capital has the biggest position in CU Bancorp (NASDAQ:CUNB), worth close to $21.3 million, comprising 1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, which holds a $4.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain Paul Hondros’ AlphaOne Capital Partners, Neil Chriss’ Hutchin Hill Capital and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Earlier we told you that the aggregate hedge fund interest in CU Bancorp (NASDAQ:CUNB) was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CU Bancorp (NASDAQ:CUNB) but similarly valued. We will take a look at Green Bancorp Inc (NASDAQ:GNBC), First Defiance Financial (NASDAQ:FDEF), Blue Nile Inc (NASDAQ:NILE), and Franklin Financial Network Inc (NYSE:FSB). This group of stocks’ market values resemble CUNB’s market value.

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 $25 million. That figure was $30 million in CUNB’s case. Blue Nile Inc (NASDAQ:NILE) is the most popular stock in this table. On the other hand Green Bancorp Inc (NASDAQ:GNBC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks CU Bancorp (NASDAQ:CUNB) is even less popular than GNBC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.