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Hedge Funds Have Never Been This Bullish On Community Bank System, Inc. (CBU)

Reymerlyn Martin

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Community Bank System, Inc. (NYSE:CBU).

Is Community Bank System, Inc. (NYSE:CBU) worth your attention right now? The best stock pickers are buying. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that CBU isn't among the 30 most popular stocks among hedge funds. CBU was in 11 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 9 hedge funds in our database with CBU holdings at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny

Let's analyze the fresh hedge fund action surrounding Community Bank System, Inc. (NYSE:CBU).

Hedge fund activity in Community Bank System, Inc. (NYSE:CBU)

At Q4's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in CBU a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

CBU_apr2019

The largest stake in Community Bank System, Inc. (NYSE:CBU) was held by Renaissance Technologies, which reported holding $5.9 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $5.1 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and GLG Partners.

As one would reasonably expect, specific money managers have jumped into Community Bank System, Inc. (NYSE:CBU) headfirst. ExodusPoint Capital, managed by Michael Gelband, established the most outsized position in Community Bank System, Inc. (NYSE:CBU). ExodusPoint Capital had $0.4 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new CBU position is Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Community Bank System, Inc. (NYSE:CBU) but similarly valued. These stocks are Stifel Financial Corp. (NYSE:SF), Paramount Group Inc (NYSE:PGRE), Platform Specialty Products Corporation (NYSE:PAH), and Dorman Products Inc. (NASDAQ:DORM). All of these stocks' market caps are closest to CBU's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SF,12,161371,0 PGRE,14,134278,2 PAH,21,774954,-3 DORM,12,86476,1 Average,14.75,289270,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $289 million. That figure was $23 million in CBU's case. Platform Specialty Products Corporation (NYSE:PAH) is the most popular stock in this table. On the other hand Stifel Financial Corp. (NYSE:SF) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Community Bank System, Inc. (NYSE:CBU) is even less popular than SF. Hedge funds dodged a bullet by taking a bearish stance towards CBU. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CBU wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); CBU investors were disappointed as the stock returned 11% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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