Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Customers Bancorp Inc (NASDAQ:CUBI) ready to rally soon? Prominent investors are really getting less optimistic. The number of long hedge fund positions that are disclosed in regulatory 13F filings went down by 1 in recent months. CUBI was in 8 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with CUBI positions at the end of the previous quarter. At the end of this article we will also compare CUBI to other stocks including PROS Holdings, Inc. (NYSE:PRO), Washington Trust Bancorp (NASDAQ:WASH), and Inovio Pharmaceuticals Inc (NYSEAMEX:INO) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Now, let’s take a gander at the new action surrounding Customers Bancorp Inc (NASDAQ:CUBI).
How have hedgies been trading Customers Bancorp Inc (NASDAQ:CUBI)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CUBI over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Alok Agrawal’s Bloom Tree Partners has the number one position in Customers Bancorp Inc (NASDAQ:CUBI), worth close to $7.5 million, corresponding to 0.6% of its total 13F portfolio. On Bloom Tree Partners’s heels is Alpenglow Capital, led by Sharif Siddiqui, which holds a $2.6 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Millennium Management, one of the 10 largest hedge funds in the world, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.