This Metric Says You Are Smart to Buy Webster Financial Corporation (WBS)

To many of your peers, hedge funds are perceived as useless, outdated financial vehicles of a forgotten age. Although there are over 8,000 hedge funds trading currently, Insider Monkey aim at the crème de la crème of this club, close to 525 funds. Analysts calculate that this group controls the majority of all hedge funds’ total assets, and by tracking their highest quality stock picks, we’ve 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 per annum 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 33 percentage points in 11 months (see all of our picks from August).

Equally as necessary, bullish insider trading sentiment is another way to look at the marketplace. As the old adage goes: there are lots of reasons for an executive to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).

Furthermore, we’re going to examine the latest info about Webster Financial Corporation (NYSE:WBS).

What have hedge funds been doing with Webster Financial Corporation (NYSE:WBS)?

In preparation for the third quarter, a total of 24 of the hedge funds we track were bullish in this stock, a change of 41% from the first quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully.

According to our 13F database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Webster Financial Corporation (NYSE:WBS). Citadel Investment Group has a $65.3 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Bernard Horn of Polaris Capital Management, with a $56.9 million position; 3.2% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management and Clint Carlson’s Carlson Capital.

As one would understandably expect, specific money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the largest position in Webster Financial Corporation (NYSE:WBS). Citadel Investment Group had 65.3 million invested in the company at the end of the quarter. Bernard Horn’s Polaris Capital Management also initiated a $56.9 million position during the quarter. The following funds were also among the new WBS investors: Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management, and Clint Carlson’s Carlson Capital.

Insider trading activity in Webster Financial Corporation (NYSE:WBS)

Insider buying is particularly usable when the company in focus has experienced transactions within the past six months. Over the latest half-year time period, Webster Financial Corporation (NYSE:WBS) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Webster Financial Corporation (NYSE:WBS). These stocks are Signature Bank (NASDAQ:SBNY), National Penn Bancshares (NASDAQ:NPBC), Fulton Financial Corp (NASDAQ:FULT), Susquehanna Bancshares Inc (NASDAQ:SUSQ), and Valley National Bancorp (NYSE:VLY). This group of stocks belong to the regional – northeast banks industry and their market caps match WBS’s market cap.

Using the returns explained by the previously mentioned strategies, regular investors should always track hedge fund and insider trading sentiment, and Webster Financial Corporation (NYSE:WBS) is an important part of this process.

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