While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Columbia Banking System Inc (NASDAQ:COLB).
Is COLB a good stock to buy now? Columbia Banking System Inc (NASDAQ:COLB) has experienced an increase in enthusiasm from smart money recently. Columbia Banking System Inc (NASDAQ:COLB) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 15. There were 9 hedge funds in our database with COLB positions at the end of the second quarter. Our calculations also showed that COLB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at present, Our experts choose to focus on the top tier of this group, about 850 funds. These hedge fund managers shepherd the lion’s share of the smart money’s total asset base, and by paying attention to their best investments, Insider Monkey has determined various investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s check out the recent hedge fund action encompassing Columbia Banking System Inc (NASDAQ:COLB).
Do Hedge Funds Think COLB Is A Good Stock To Buy Now?
At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COLB over the last 21 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Columbia Banking System Inc (NASDAQ:COLB) was held by Cardinal Capital, which reported holding $60.8 million worth of stock at the end of September. It was followed by GLG Partners with a $10.2 million position. Other investors bullish on the company included Balyasny Asset Management, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Columbia Banking System Inc (NASDAQ:COLB), around 2.54% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to COLB.
As industrywide interest jumped, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Columbia Banking System Inc (NASDAQ:COLB). Balyasny Asset Management had $1.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners and Minhua Zhang’s Weld Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Columbia Banking System Inc (NASDAQ:COLB) but similarly valued. We will take a look at Oi SA (NYSE:OIBR), CareTrust REIT Inc (NASDAQ:CTRE), NanoString Technologies Inc (NASDAQ:NSTG), Turquoise Hill Resources Ltd (NYSE:TRQ), Range Resources Corp. (NYSE:RRC), Genworth Financial Inc (NYSE:GNW), and Flagstar Bancorp Inc (NYSE:FBC). 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|
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $77 million in COLB’s case. Genworth Financial Inc (NYSE:GNW) is the most popular stock in this table. On the other hand Oi SA (NYSE:OIBR) is the least popular one with only 6 bullish hedge fund positions. Columbia Banking System Inc (NASDAQ:COLB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for COLB is 36.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on COLB as the stock returned 46.7% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.