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‘Change of Strategy Opted Us to Dispose Customers Bancorp (CUBI)’, Says Third Avenue Management

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Jose Karlo Mari Tottoc
·3 min read
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Third Avenue Management, a disciplined, value-oriented asset manager and investment fund, published its ‘Small-Cap Value Fund’ third-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 11.41% was recorded by the fund for the 3rd Quarter of 2020, below its Russell 2000 Value benchmark that returned 18.91%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Third Avenue Management in their Small-Cap Value Fund’s Q3 2020 Investor Letter said that they eliminated their positions in Customers Bancorp, Inc. (NYSE: CUBI) because of a certain change in CUBI's strategy. Customers Bancorp, Inc. is a bank holding company that currently has a $717 million market cap. For the past 3 months, CUBI delivered a huge 77.07% return and settled at $22.70 per share at the closing of January 15th.

Here is what Third Avenue Management has to say about Customers Bancorp, Inc. in their Investor Letter:

"Customers Bancorp (“Customers”) was sold due to a substantial change in the company’s strategy. When the security was purchased, the company had decided to curtail growth and reposition its loan portfolio away from multi-family real estate. Capital ratios were poised to grow during the transition. Customers’ management reasoned that the aversion to growth would breed conservative loan underwriting. In early 2020 though, Customers’ management decided to start growing again and has made bold moves into consumer loans to boost net interest margins. This strategy may work in due course, but these shifts shook our confidence in the bank’s capital position and asset portfolio."

Creative Lab/Shutterstock.com

Last December 2020, we published an article telling that Customers Bancorp, Inc. (NYSE: CUBI) was in 10 hedge funds’ portfolio. Its all time high statistics is 16. Customers Bancorp, Inc. delivered a 24.86% return YTD.

Our calculations showed that Customers Bancorp, Inc. (NYSE: CUBI) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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