Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Amid a 4% decline of its stock, Columbia Banking System Inc (NASDAQ:COLB) registered an increase in popularity among the funds we follow and the number of bullish hedge fund bets inched up by 3 during the third quarter. COLB was in 14 hedge funds’ portfolios at the end of September. At the end of this article we will also compare COLB to other stocks, including Werner Enterprises, Inc. (NASDAQ:WERN) and Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE) to get a better sense of its popularity.
According to most shareholders, hedge funds are seen as worthless, old financial tools of yesteryear. While there are more than 8000 funds trading at present, We hone in on the masters of this group, around 700 funds. These money managers have their hands on most of the smart money’s total asset base, and by tracking their top picks, Insider Monkey has uncovered a number of investment strategies that have historically outpaced the broader indices. 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.
With all of this in mind, let’s take a gander at the fresh action surrounding Columbia Banking System Inc (NASDAQ:COLB).
Hedge fund activity in Columbia Banking System Inc (NASDAQ:COLB)
At the Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the second quarter. Among these investors, Forest Hill Capital, managed by Mark Lee, holds the largest position in Columbia Banking System Inc (NASDAQ:COLB). Forest Hill Capital has a $42.3 million position in the stock, comprising 4% of its 13F portfolio. Sitting at the No. 2 spot is Amy Minella’s Cardinal Capital, with a $35 million position; 2.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Michael Price’s MFP Investors, Israel Englander’s Millennium Management, and Chuck Royce’s Royce & Associates.
As aggregate interest increased, some big names were breaking ground themselves. AlphaOne Capital Partners, managed by Paul Hondros, created the most outsized position in Columbia Banking System Inc (NASDAQ:COLB). AlphaOne Capital Partners had $4 million invested in the company at the end of the quarter. Ken Fisher’s Fisher Asset Management also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Cliff Asness’ AQR Capital Management and Matthew Tewksbury’s Stevens Capital Management.
Let’s go over hedge fund activity in other stocks similar to Columbia Banking System Inc (NASDAQ:COLB). We will take a look at Werner Enterprises, Inc. (NASDAQ:WERN), Coca-Cola Bottling Co. Consolidated (NASDAQ:COKE) and Parkway Properties Inc (NYSE:PKY). This group of stocks’ market valuations resemble COLB’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $73 million, which is lower than the $131 million in COLB’s case. Werner Enterprises, Inc. (NASDAQ:WERN) is the most popular stock in this table, while the other two stocks are the least popular ones. Columbia Banking System Inc (NASDAQ:COLB) is as popular as WERN, which suggests that the stock may be a profitable investment, but further research is required in order to make a decision.