What Do Hedge Funds Think of First Business Financial Services Inc (FBIZ)?

Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of First Business Financial Services Inc (NASDAQ:FBIZ).

First Business Financial Services Inc (NASDAQ:FBIZ) was in 4 hedge funds’ portfolios at the end of September. FBIZ investors should be aware of a decrease in hedge fund interest of late. There were 5 hedge funds in our database with FBIZ holdings at the end of the previous quarter. At the end of this article we will also compare FBIZ to other stocks including Clean Energy Fuels Corp (NASDAQ:CLNE), Corcept Therapeutics Incorporated (NASDAQ:CORT), and Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) to get a better sense of its popularity.

With all of this in mind, let’s take a glance at the key action regarding First Business Financial Services Inc (NASDAQ:FBIZ).

Hedge fund activity in First Business Financial Services Inc (NASDAQ:FBIZ)

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fred Cummings’s Elizabeth Park Capital Management has the number one position in First Business Financial Services Inc (NASDAQ:FBIZ), worth close to $5.2 million, amounting to 1.7% of its total 13F portfolio. The second largest stake is held by Hutchin Hill Capital, led by Neil Chriss, holding a $3.6 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers that are bullish contain Jim Simons’s Renaissance Technologies, and John Overdeck and David Siegel’s Two Sigma Advisors.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified FBIZ as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as First Business Financial Services Inc (NASDAQ:FBIZ) but similarly valued. We will take a look at Clean Energy Fuels Corp (NASDAQ:CLNE), Corcept Therapeutics Incorporated (NASDAQ:CORT), Multi-Fineline Electronix, Inc. (NASDAQ:MFLX), and Catchmark Timber Trust Inc (NYSE:CTT). This group of stocks’ market valuations match FBIZ’s market valuation.

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 $16 million. That figure was $13 million in FBIZ’s case. Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) is the most popular stock in this table. On the other hand Clean Energy Fuels Corp (NASDAQ:CLNE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks First Business Financial Services Inc (NASDAQ:FBIZ) is even less popular than CLNE. 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.