Should You Avoid Columbia Financial, Inc. (CLBK)?

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Columbia Financial, Inc. (NASDAQ:CLBK) in order to identify whether reputable and successful top money managers continue to believe in its potential.

Columbia Financial, Inc. (NASDAQ:CLBK) shareholders have witnessed a decrease in hedge fund interest lately. CLBK was in 10 hedge funds’ portfolios at the end of the third quarter of 2019. There were 12 hedge funds in our database with CLBK holdings at the end of the previous quarter. Our calculations also showed that CLBK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a multitude of gauges shareholders have at their disposal to grade publicly traded companies. A duo of the less utilized gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace the broader indices by a very impressive amount (see the details here).


Jim Simons of Renaissance Technologies

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the latest hedge fund action regarding Columbia Financial, Inc. (NASDAQ:CLBK).

What have hedge funds been doing with Columbia Financial, Inc. (NASDAQ:CLBK)?

Heading into the fourth quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in CLBK a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Is CLBK A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Frederick DiSanto’s Ancora Advisors has the biggest position in Columbia Financial, Inc. (NASDAQ:CLBK), worth close to $9.6 million, accounting for 0.4% of its total 13F portfolio. Coming in second is Seidman Investment Partnership, led by Lawrence Seidman, holding a $8.6 million position; 7.8% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain Renaissance Technologies, Michael Price’s MFP Investors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Seidman Investment Partnership allocated the biggest weight to Columbia Financial, Inc. (NASDAQ:CLBK), around 7.78% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, dishing out 1.09 percent of its 13F equity portfolio to CLBK.

Since Columbia Financial, Inc. (NASDAQ:CLBK) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of money managers who sold off their full holdings by the end of the third quarter. Intriguingly, Israel Englander’s Millennium Management sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $0.6 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Columbia Financial, Inc. (NASDAQ:CLBK). We will take a look at First Majestic Silver Corp (NYSE:AG), TransAlta Corporation (NYSE:TAC), Plexus Corp. (NASDAQ:PLXS), and InVitae Corporation (NYSE:NVTA). This group of stocks’ market values resemble CLBK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AG 14 33132 5
TAC 7 30962 -2
PLXS 8 58196 0
NVTA 13 325070 -3
Average 10.5 111840 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $38 million in CLBK’s case. First Majestic Silver Corp (NYSE:AG) is the most popular stock in this table. On the other hand TransAlta Corporation (NYSE:TAC) is the least popular one with only 7 bullish hedge fund positions. Columbia Financial, Inc. (NASDAQ:CLBK) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CLBK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CLBK investors were disappointed as the stock returned 5.5% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.

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