U.S. Markets close in 2 hrs 39 mins

Basswood Capital Management’s Returns, AUM and Holdings

Jelena Martinovic

Matthew Lindenbaum's Basswood Capital Management, L.L.C. is a New York-based, employee-owned hedge fund sponsor founded back in 1998 with a focus on providing services to pooled investment vehicles. Mr. Lindenbaum, its principal and portfolio manager, is a 1986 graduate of Brandeis University, and has gathered vast experience in investment management during his three-decade-long career.

Prior to joining SNL Securities, LLC in 1987, where he eventually became a General Partner, he dealt with structuring derivative mortgage securities while working for Mortgage Finance Group at Merrill Lynch Capital Markets. In 1994 he began serving as a Director of Garden State Bancshares, Inc. Four years later he co-founded Basswood Partners, L.L.C. with his brother Bennett Lindenbaum, where he serves as a Managing Partner and Portfolio Manager. He also serves as Principal and Portfolio Manager at Basswood Enhanced Long Short Fund LP and Basswood Financial Fund, L.P.

Matthew Lindenbaum was also a founder and Vice Chairman of Community National Bank, an independent commercial bank based in Long Island, NY, where he also served as a Director for ten years, until June 2015, when the bank was acquired by BNB Bank. Since March 2014, he's served as a Director of Hudson Valley Bank, N.A., as well as a Director of Hudson Valley Holding Corp. until 2015. Prior to becoming a Director of Bridge Bancorp, Inc., and BNB Bank, where he's served since May 2018, he was Board Observer of Seacoast Banking Corp. of Florida for two years.

[caption id="attachment_565788" align="aligncenter" width="750"] Phongphan/Shutterstock.com[/caption]

Basswood Capital Management's Returns, AUM and Holdings

Basswood Capital Management, L.L.C. invests in public equity and fixed income markets worldwide. In addition to utilizing value-oriented and event-driven strategies, the fund also uses fundamental analysis to help with its investment decisions. It has also been involved in shareholder activism in the banking industry, as evidenced by the fund taking activist stakes in Astoria Financial and Bridge Bancorp through years.

Its Basswood Opportunity Fund, Inc. Class (A) fund has generated positive returns in the last five years, with this year being an exception. The biggest return of 15.47% was recorded in 2013. In the following year, the fund returned 3.17%. In 2015 and 2016, the returns didn't fluctuate much, being 7.91% and 7.23%, respectively. In 2017 its returns almost doubled year-over-year, surging to 13.13%. Unfortunately, 2018 has been a down year for the fund, with it having lost 0.65% through October 31. Its total return was 246.09% for a compound annual return of 7.07%, while its worst drawdown amounted to 19.19. As of March 31, 2017, the fund managed approximately $1.2 billion of client assets, all of which were being managed on a discretionary basis.

Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Since its inception in May 2014, our flagship strategy generated a cumulative return of 96.9%, beating the S&P 500 ETF (SPY) by over 40 percentage points (see the details here).

According to Basswood Capital Management’s latest 13F filing, for the third quarter of 2018, the fund's 13F portfolio was valued at $2.19 billion after adding 11 new positions and dumping 13 companies, pushing its total down to 134 holdings. The third-biggest position it held was in JP Morgan Chase & Co (NYSE:JPM), which found a place among the 30 Most Popular Stocks Among Hedge Funds in Q3 of 2018. At the end of the third-quarter, the fund owned 733,012 JPM shares worth $82.71 million.

Another favorite stock of the fund is Comerica Inc (NYSE:CMA), a holding which has remained unchanged throughout this year at 161,137 shares. While Mr. Lindenbaum is not a billionaire (yet at least), Comerica was one of the 25 Stocks Billionaires Are Piling On. You can find more details about the fund's portfolio changes and top positions on the next page.

Topping the list of Basswood Capital Management’s largest stakes as of the end of Q3 is Ally Financial Inc. (NYSE:ALLY), followed by OneMain Holdings Inc. (NYSE:OMF) -- the same as in the previous quarter. During the third-quarter, the fund raised its stake in Ally Financial Inc. (NYSE:ALLY) by 5%, holding 6.77 million shares valued at $179 million. When it comes to OneMain Holdings Inc. (NYSE:OMF), it remained the fund’s second-largest stake during the Q3, although the fund decreased its position in the company by 15%,to 2.60 million shares valued at $87.28 million.

Basswood Capital Management’s top new holdings added during Q3 include Cit Group Inc (NYSE:CIT), a financial holding company for CIT Bank, in which the fund built a stake worth $19.75 million, buying 382,189 shares. Another is Customers Bancorp Inc. (NYSE:CUBI), a bank holding company for Customers Bank, 244,303 shares of which the fund acquired during the quarter; they were valued at $5.74 million on September 30.

The fund showed some enthusiasm when it comes to Hancock Whitney Corp (NASDAQ:HWC), boosting its stake in the company by an obscene 633,380% to 335,744 shares valued at $15.96 million. The same goes for Sterling Bancorp (NYSE:STL), in which the fund increased its stake by 65% to 2.89 million shares worth $63.65 million. It’s interesting to note that Basswood actually decreased the size of its investment in Wells Fargo & Company (NYSE:WFC), which has been (and still is) one of the fund’s top holdings for years. The fund lowered its stake in the company by 22%, holding 1.25 million shares valued at $65.79 million. The company in which the fund lost interest in the most during Q3 was Maryland-based Sandy Spring Bancorp Inc (NASDAQ:SASR), lowering its stake in the company by 83% to 33,015 shares worth $1.30 million.

The biggest positions Basswood Capital Management decided to completely sell off during the Q3 were its stakes in Old Point Financial Corp (NASDAQ:OPOF) and Huntington Bancshares Inc (NASDAQ:HBAN), selling off 21,404 shares and 90,169 shares, respectively.

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