Is Columbia Banking System Inc (NASDAQ:COLB) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Columbia Banking System Inc (NASDAQ:COLB) investors should be aware of an increase in hedge fund sentiment recently. Our calculations also showed that COLB isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We're going to take a gander at the latest hedge fund action regarding Columbia Banking System Inc (NASDAQ:COLB).
What have hedge funds been doing with Columbia Banking System Inc (NASDAQ:COLB)?
Heading into the fourth quarter of 2018, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the second quarter of 2018. By comparison, 11 hedge funds held shares or bullish call options in COLB heading into this year. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Columbia Banking System Inc (NASDAQ:COLB) was held by Cardinal Capital, which reported holding $106.3 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $5.9 million position. Other investors bullish on the company included GLG Partners, AlphaOne Capital Partners, and Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Columbia Banking System Inc (NASDAQ:COLB) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in Columbia Banking System Inc (NASDAQ:COLB). Balyasny Asset Management had $5.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $1.7 million investment in the stock during the quarter. The only other fund with a brand new COLB position is Matthew Tewksbury's Stevens Capital Management.
Let's also examine hedge fund activity in other stocks similar to Columbia Banking System Inc (NASDAQ:COLB). We will take a look at Cyberark Software Ltd (NASDAQ:CYBR), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), Stantec Inc. (NYSE:STN), and Watts Water Technologies Inc (NYSE:WTS). This group of stocks' market values match COLB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYBR,24,407866,7 IRWD,17,316714,1 STN,5,82481,0 WTS,15,351313,2 Average,15.25,289594,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $290 million. That figure was $133 million in COLB's case. Cyberark Software Ltd (NASDAQ:CYBR) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 5 bullish hedge fund positions. Columbia Banking System Inc (NASDAQ:COLB) 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. In this regard CYBR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
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