Should You Buy Columbia Banking System Inc (COLB)?
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Columbia Banking System Inc (NASDAQ:COLB) based on that data.
Columbia Banking System Inc (NASDAQ:COLB) shareholders have witnessed an increase in support from the world's most elite money managers of late. COLB was in 8 hedge funds' portfolios at the end of September. There were 7 hedge funds in our database with COLB holdings at the end of the previous 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 below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Ken Fisher of Fisher Asset Management[/caption]
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. Let's take a glance at the fresh hedge fund action regarding Columbia Banking System Inc (NASDAQ:COLB).
What does smart money think about Columbia Banking System Inc (NASDAQ:COLB)?
Heading into the fourth quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in COLB a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Amy Minella's Cardinal Capital has the biggest position in Columbia Banking System Inc (NASDAQ:COLB), worth close to $91.7 million, amounting to 3% of its total 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $2.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group and David E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Columbia Banking System Inc (NASDAQ:COLB), around 3.03% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to COLB.
Now, some big names were leading the bulls' herd. GLG Partners, managed by Noam Gottesman, initiated the largest position in Columbia Banking System Inc (NASDAQ:COLB). GLG Partners had $0.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $0.6 million position during the quarter. The only other fund with a new position in the stock is Donald Sussman's Paloma Partners.
Let's go over 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 Fulton Financial Corp (NASDAQ:FULT), Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR), Meritage Homes Corp (NYSE:MTH), and Acacia Communications, Inc. (NASDAQ:ACIA). This group of stocks' market valuations resemble COLB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FULT,15,17782,1 ARWR,15,156469,-1 MTH,25,360789,10 ACIA,25,507691,-3 Average,20,260683,1.75 [/table]
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 $261 million. That figure was $101 million in COLB's case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Fulton Financial Corp (NASDAQ:FULT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Columbia Banking System Inc (NASDAQ:COLB) is even less popular than FULT. 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. A small number of hedge funds were also right about betting on COLB, though not to the same extent, as the stock returned 6.6% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
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