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Community Bank System, Inc. (CBU) Sees Unchanged but Weak Smart Money Sentiment

We can judge whether Community Bank System, Inc. (NYSE:CBU) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

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Community Bank System, Inc. (NYSE:CBU) was in 6 hedge funds’ portfolio at the end of the third quarter of 2015. CBU investors should pay attention to a decrease in enthusiasm from smart money recently. There were 6 hedge funds in our database with CBU holdings at the end of the previous quarter. At the end of this article we will also compare CBU to other stocks including Express, Inc. (NYSE:EXPR), Pacira Pharmaceuticals Inc (NASDAQ:PCRX), and WebMD Health Corp. (NASDAQ:WBMD) to get a better sense of its popularity.

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To most traders, hedge funds are seen as worthless, old investment tools of years past. While there are over 8000 funds with their doors open at the moment, Hedge fund experts at Insider Monkey choose to focus on the elite of this group, around 700 funds. Most estimates calculate that this group of people preside over the majority of all hedge funds’ total capital, and by observing their unrivaled equity investments, Insider Monkey has determined various investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to check out the new action surrounding Community Bank System, Inc. (NYSE:CBU).

Hedge fund activity in Community Bank System, Inc. (NYSE:CBU)

At the end of Q3, just six of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the previous quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially.

According to hedge fund intelligence website Insider Monkey, Jim Simons’s Renaissance Technologies had the number one position in Community Bank System, Inc. (NYSE:CBU), worth close to $6.8 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish hedge fund manager is Citadel Investment Group, managed by Ken Griffin, which held a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions comprise John Overdeck and David Siegel’s Two Sigma Advisors and Matthew Tewksbury’s Stevens Capital Management.

Moreover, there was a sect of money managers that slashed their entire stakes heading into Q4. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest position of the 700 funds monitored by Insider Monkey, worth an estimated $0.7 million in stock. Jacob Gottlieb’s fund, Visium Asset Management, also dumped its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Community Bank System, Inc. (NYSE:CBU). We will take a look at Express, Inc. (NYSE:EXPR), Pacira Pharmaceuticals Inc (NASDAQ:PCRX), WebMD Health Corp. (NASDAQ:WBMD), and Lannett Company, Inc. (NYSEAMEX:LCI). This group of stocks’ market valuations are closest to CBU’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EXPR 34 269084 4
PCRX 29 404784 4
WBMD 26 523091 6
LCI 24 131666 7

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $332 million. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand Lannett Company, Inc. (NYSEAMEX:LCI) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks, Community Bank System, Inc. (NYSE:CBU) is much less popular, with may raise some concerns regarding the stock’s trajectory in the near- to medium-term.

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