There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze CenterState Banks Inc (NASDAQ:CSFL) .
CenterState Banks Inc (NASDAQ:CSFL) was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. CSFL shareholders have witnessed an increase in hedge fund interest lately. CSFL was in 18 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with CSFL holdings at the end of the previous quarter. 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 Continental Building Products Inc (NYSE:CBPX), Hanmi Financial Corp (NASDAQ:HAFC), and Gamco Investors Inc. (NYSE:GBL) to gather more data points.
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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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How have hedgies been trading CenterState Banks Inc (NASDAQ:CSFL)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 38% from the second quarter of 2016. By comparison, 18 hedge funds held shares or bullish call options in CSFL heading into this year. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Mark Lee’s Forest Hill Capital has the largest position in CenterState Banks Inc (NASDAQ:CSFL), worth close to $9.7 million, corresponding to 4.8% of its total 13F portfolio. The second largest stake is held by Jim Simons’ Renaissance Technologies, which holds a $8.8 million position. Some other professional money managers that are bullish contain Fred Cummings’ Elizabeth Park Capital Management, Chuck Royce’s Royce & Associates and Michael O’Keefe’s 12th Street Asset Management. We should note that 12th Street Asset Management is 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.
Now, key hedge funds were breaking ground themselves. Alpenglow Capital, led by Sharif Siddiqui, created the most outsized position in CenterState Banks Inc (NASDAQ:CSFL). Alpenglow Capital had $1.3 million invested in the company at the end of the quarter. Paul Tudor Jones’ Tudor Investment Corp also initiated a $0.4 million position during the quarter. The other funds with brand new CSFL positions are Mike Vranos’ Ellington, Ken Griffin’s Citadel Investment Group, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks similar to CenterState Banks Inc (NASDAQ:CSFL). These stocks are Continental Building Products Inc (NYSE:CBPX), Hanmi Financial Corp (NASDAQ:HAFC), Gamco Investors Inc. (NYSE:GBL), and Crossamerica Partners LP (NYSE:CAPL). This group of stocks’ market values resemble CSFL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBPX | 26 | 126843 | 0 |
| HAFC | 8 | 48653 | 1 |
| GBL | 9 | 14014 | 0 |
| CAPL | 5 | 26687 | 0 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $56 million in CSFL’s case. Continental Building Products Inc (NYSE:CBPX) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 5 bullish hedge fund positions. CenterState Banks Inc (NASDAQ:CSFL) 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. In this regard CBPX might be a better candidate to consider taking a long position in.
Disclosure: None
