What Do Hedge Funds Think About Citizens Community Bancorp Inc. (CZWI)?

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Citizens Community Bancorp Inc. (NASDAQ:CZWI).

Citizens Community Bancorp Inc. (NASDAQ:CZWI) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of September. At the end of this article we will also compare CZWI to other stocks, including Fairway Group Holdings Corp (NASDAQ:FWM), FXCM Inc (NYSE:FXCM), and Innovative Solutions & Support Inc (NASDAQ:ISSC) to get a better sense of its popularity.

To the average investor there are a multitude of signals stock traders employ to size up publicly traded companies. Two of the less known signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite money managers can trounce the broader indices by a significant amount (see the details here).

Keeping this in mind, we’re going to analyze the recent action surrounding Citizens Community Bancorp Inc. (NASDAQ:CZWI).

Hedge fund activity in Citizens Community Bancorp Inc. (NASDAQ:CZWI)

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jeffrey Gendell’s Tontine Asset Management has the most valuable position in Citizens Community Bancorp Inc. (NASDAQ:CZWI), worth close to $2.3 million, accounting for 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Arbiter Partners Capital Management, led by Paul J. Isaac, holding a $1.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Neil Chriss’s Hutchin Hill Capital and .

Earlier we told you that the aggregate hedge fund interest in the stock 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 Citizens Community Bancorp Inc. (NASDAQ:CZWI) but similarly valued. These stocks are Fairway Group Holdings Corp (NASDAQ:FWM), FXCM Inc (NYSE:FXCM), Innovative Solutions & Support Inc (NASDAQ:ISSC), and Mitcham Industries, Inc. (NASDAQ:MIND). All of these stocks’ market caps resemble CZWI’s market cap.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $4 million in CZWI’s case. Fairway Group Holdings Corp (NASDAQ:FWM) is the most popular stock in this table, while Innovative Solutions & Support Inc (NASDAQ:ISSC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Citizens Community Bancorp Inc. (NASDAQ:CZWI) is even less popular than ISSC. 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.