TFS Financial Corporation (NASDAQ:TFSL): Insiders Are Dumping, Should You? – PrivateBancorp Inc (NASDAQ:PVTB), Associated Banc Corp (NASDAQ:ASBC)

TFS Financial Corporation (NASDAQ:TFSL) has experienced an increase in hedge fund sentiment in recent months.

TFS Financial Corporation (NASDAQ:TFSL)

In the eyes of most investors, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are more than 8000 funds trading at the moment, we choose to focus on the crème de la crème of this group, close to 450 funds. It is widely believed that this group oversees most of the smart money’s total asset base, and by tracking their highest performing stock picks, we have uncovered a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Equally as important, bullish insider trading activity is another way to break down the investments you’re interested in. Obviously, there are plenty of incentives for an upper level exec to drop shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).

Now, it’s important to take a peek at the latest action surrounding TFS Financial Corporation (NASDAQ:TFSL).

Hedge fund activity in TFS Financial Corporation (NASDAQ:TFSL)

At the end of the fourth quarter, a total of 14 of the hedge funds we track were long in this stock, a change of 40% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, holds the biggest position in TFS Financial Corporation (NASDAQ:TFSL). Empyrean Capital Partners has a $58 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $48 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Matt Sirovich and Jeremy Mindich’s Scopia Capital, Yale M. Fergang and Robert W. Medway’s Royal Capital and D. E. Shaw’s D E Shaw.

Now, key money managers were leading the bulls’ herd. Gruss Asset Management, managed by Howard Guberman, established the most valuable position in TFS Financial Corporation (NASDAQ:TFSL). Gruss Asset Management had 3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $1 million investment in the stock during the quarter. The other funds with brand new TFSL positions are John A. Levin’s Levin Capital Strategies, Glenn Russell Dubin’s Highbridge Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

What do corporate executives and insiders think about TFS Financial Corporation (NASDAQ:TFSL)?

Bullish insider trading is best served when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time period, TFS Financial Corporation (NASDAQ:TFSL) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to TFS Financial Corporation (NASDAQ:TFSL). These stocks are PrivateBancorp Inc (NASDAQ:PVTB), Comerica Incorporated (NYSE:CMA), Huntington Bancshares Incorporated (NASDAQ:HBAN), Firstmerit Corp (NASDAQ:FMER), and Associated Banc Corp (NASDAQ:ASBC). This group of stocks are the members of the regional – midwest banks industry and their market caps resemble TFSL’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
PrivateBancorp Inc (NASDAQ:PVTB) 16 3 0
Comerica Incorporated (NYSE:CMA) 23 1 5
Huntington Bancshares Incorporated (NASDAQ:HBAN) 21 7 1
Firstmerit Corp (NASDAQ:FMER) 12 4 0
Associated Banc Corp (NASDAQ:ASBC) 7 3 1

With the results demonstrated by Insider Monkey’s time-tested strategies, everyday investors must always monitor hedge fund and insider trading activity, and TFS Financial Corporation (NASDAQ:TFSL) is no exception.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.