Do Hedge Funds Love Charter Financial Corp (CHFN)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Gruss Asset Management. 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 Nine Chapters Capital Management).

Let’s also examine hedge fund activity in other stocks similar to Charter Financial Corp (NASDAQ:CHFN). We will take a look at Blue Bird Copr (NASDAQ:BLBD), Tribune Publishing Co (NYSE:TPUB), Peregrine Pharmaceuticals (NASDAQ:PPHM), and Black Diamond Inc (NASDAQ:BDE). This group of stocks’ market valuations are closest to CHFN’s market valuation.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $30 million, close to the $31 million in CHFN’s case. Tribune Publishing Co (NYSE:TPUB) is the most popular stock in this table. On the other hand Blue Bird Copr (NASDAQ:BLBD) is the least popular one with only 7 bullish hedge fund positions. Charter Financial Corp (NASDAQ:CHFN) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TPUB might be a better candidate to consider a long position.