Connecticut Water Service, Inc. (CTWS): Are Hedge Funds Right About This Stock?

Page 2 of 2

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: PDT Partners. 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 only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Springbok Capital).

Let’s check out hedge fund activity in other stocks similar to Connecticut Water Service, Inc. (NASDAQ:CTWS). These stocks are First Business Financial Services Inc (NASDAQ:FBIZ), Clean Energy Fuels Corp (NASDAQ:CLNE), Corcept Therapeutics Incorporated (NASDAQ:CORT), and Multi-Fineline Electronix, Inc. (NASDAQ:MFLX). This group of stocks’ market valuations are closest to CTWS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FBIZ 4 12689 -1
CLNE 6 5048 -6
CORT 14 7214 5
MFLX 17 23126 4

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. In the case of CTWS, the amount committed by hedge funds is just $8 million. Multi-Fineline Electronix, Inc. (NASDAQ:MFLX) is the most popular stock in this table. On the other hand First Business Financial Services Inc (NASDAQ:FBIZ) is the least popular one with only 4 bullish hedge fund positions. Connecticut Water Service, Inc. (NASDAQ:CTWS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MFLX might be a better candidate to consider a long position.

Page 2 of 2