Is Civista Bancshares, Inc. (CIVB) A Good Stock To Buy?

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In this article you are going to find out whether hedge funds think Civista Bancshares, Inc. (NASDAQ:CIVB) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hedge fund interest in Civista Bancshares, Inc. (NASDAQ:CIVB) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CIVB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Artesian Resources Corporation (NASDAQ:ARTNA), Fusion Pharmaceuticals Inc. (NASDAQ:FUSN), and Mereo BioPharma Group plc (NASDAQ:MREO) to gather more data points.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Fred Cummings of Elizabeth Park Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the key hedge fund action surrounding Civista Bancshares, Inc. (NASDAQ:CIVB).

Do Hedge Funds Think CIVB Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in CIVB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in Civista Bancshares, Inc. (NASDAQ:CIVB), which was worth $3.8 million at the end of the second quarter. On the second spot was Mendon Capital Advisors which amassed $2.7 million worth of shares. Elizabeth Park Capital Management, Two Sigma Advisors, and Bailard Inc were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Civista Bancshares, Inc. (NASDAQ:CIVB), around 0.96% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, setting aside 0.66 percent of its 13F equity portfolio to CIVB.

Judging by the fact that Civista Bancshares, Inc. (NASDAQ:CIVB) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds that slashed their entire stakes by the end of the second quarter. Intriguingly, D. E. Shaw’s D E Shaw cut the biggest investment of all the hedgies followed by Insider Monkey, totaling an estimated $0.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Civista Bancshares, Inc. (NASDAQ:CIVB) but similarly valued. These stocks are Artesian Resources Corporation (NASDAQ:ARTNA), Fusion Pharmaceuticals Inc. (NASDAQ:FUSN), Mereo BioPharma Group plc (NASDAQ:MREO), Adverum Biotechnologies, Inc. (NASDAQ:ADVM), Kala Pharmaceuticals, Inc. (NASDAQ:KALA), Fulcrum Therapeutics, Inc. (NASDAQ:FULC), and Coastal Financial Corporation (NASDAQ:CCB). All of these stocks’ market caps match CIVB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARTNA 4 17433 2
FUSN 8 83165 -1
MREO 24 175456 1
ADVM 14 66723 -8
KALA 12 91817 -4
FULC 14 65483 -3
CCB 5 28237 2
Average 11.6 75473 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $11 million in CIVB’s case. Mereo BioPharma Group plc (NASDAQ:MREO) is the most popular stock in this table. On the other hand Artesian Resources Corporation (NASDAQ:ARTNA) is the least popular one with only 4 bullish hedge fund positions. Civista Bancshares, Inc. (NASDAQ:CIVB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CIVB is 45. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on CIVB as the stock returned 8.1% since the end of the second quarter (through 9/27) and outperformed the market by an even larger margin.

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