Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like CoBiz Financial Inc (NASDAQ:COBZ).
CoBiz Financial Inc (NASDAQ:COBZ) was in 8 hedge funds’ portfolios at the end of September. COBZ has seen an increase in support from the world’s most successful money managers of late. COBZ was in 8 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with COBZ positions at the end of the previous quarter. At the end of this article we will also compare COBZ to other stocks including Student Transportation Inc (NASDAQ:STB), First Trust High Income Long/short Fund (NYSE:FSD), and Rudolph Technologies Inc (NYSE:RTEC) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Hedge fund activity in CoBiz Financial Inc (NASDAQ:COBZ)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, up by 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COBZ over the last 5 quarters. So, let’s examine 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, Elizabeth Park Capital Management, led by Fred Cummings, holds the most valuable position in CoBiz Financial Inc (NASDAQ:COBZ). Elizabeth Park Capital Management has a $7.3 million position in the stock, comprising 3.2% of its 13F portfolio. On Elizabeth Park Capital Management’s heels is Renaissance Technologies, one of the largest hedge funds in the world, with a $6.3 million position. Remaining peers that hold long positions encompass Israel Englander’s Millennium Management, and Bernard Horn’s Polaris Capital Management. 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.
As aggregate interest increased, specific money managers have been driving this bullishness. Citadel Investment Group, led by Ken Griffin, assembled the most valuable position in CoBiz Financial Inc (NASDAQ:COBZ). Citadel Investment Group had $0.7 million invested in the company at the end of the quarter. Sharif Siddiqui’s Alpenglow Capital also made a $0.5 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CoBiz Financial Inc (NASDAQ:COBZ) but similarly valued. These stocks are Student Transportation Inc (NASDAQ:STB), First Trust High Income Long/short Fund (NYSE:FSD), Rudolph Technologies Inc (NYSE:RTEC), and Unitil Corporation (NYSE:UTL). This group of stocks’ market values are closest to COBZ’s market value.
|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 $44 million. That figure was $19 million in COBZ’s case. Rudolph Technologies Inc (NYSE:RTEC) is the most popular stock in this table. On the other hand First Trust High Income Long/short Fund (NYSE:FSD) is the least popular one with only 3 bullish hedge fund positions. CoBiz Financial Inc (NASDAQ:COBZ) 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 RTEC might be a better candidate to consider taking a long position in.