Hedge Funds Have Never Been This Bullish On Community Bank System, Inc. (CBU)

The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Community Bank System, Inc. (NYSE:CBU) based on those filings.

Community Bank System, Inc. (NYSE:CBU) was in 12 hedge funds’ portfolios at the end of June. CBU shareholders have witnessed an increase in enthusiasm from smart money of late. There were 8 hedge funds in our database with CBU holdings at the end of the previous quarter. Our calculations also showed that CBU isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the latest hedge fund action encompassing Community Bank System, Inc. (NYSE:CBU).

What does smart money think about Community Bank System, Inc. (NYSE:CBU)?

Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the first quarter of 2019. By comparison, 8 hedge funds held shares or bullish call options in CBU a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

No of Hedge Funds with CBU Positions

Among these funds, Balyasny Asset Management held the most valuable stake in Community Bank System, Inc. (NYSE:CBU), which was worth $13.6 million at the end of the second quarter. On the second spot was GLG Partners which amassed $5.5 million worth of shares. Moreover, Citadel Investment Group, D E Shaw, and Minerva Advisors were also bullish on Community Bank System, Inc. (NYSE:CBU), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Community Bank System, Inc. (NYSE:CBU) headfirst. Minerva Advisors, managed by David P. Cohen, created the most valuable position in Community Bank System, Inc. (NYSE:CBU). Minerva Advisors had $1.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new CBU investors: Ken Griffin’s Citadel Investment Group, Benjamin A. Smith’s Laurion Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s go over hedge fund activity in other stocks similar to Community Bank System, Inc. (NYSE:CBU). We will take a look at Paramount Group Inc (NYSE:PGRE), Coherent, Inc. (NASDAQ:COHR), Navient Corporation (NASDAQ:NAVI), and Gates Industrial Corporation plc (NYSE:GTES). This group of stocks’ market values are similar to CBU’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PGRE 13 256557 -3
COHR 19 188599 5
NAVI 26 490383 -5
GTES 13 16531 4
Average 17.75 238018 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $30 million in CBU’s case. Navient Corporation (NASDAQ:NAVI) is the most popular stock in this table. On the other hand Paramount Group Inc (NYSE:PGRE) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Community Bank System, Inc. (NYSE:CBU) is even less popular than PGRE. Hedge funds dodged a bullet by taking a bearish stance towards CBU. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CBU wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CBU investors were disappointed as the stock returned -5.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.