Is Cullen/Frost Bankers, Inc. (NYSE:CFR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is CFR a good stock to buy now? Cullen/Frost Bankers, Inc. (NYSE:CFR) has seen an increase in support from the world's most elite money managers recently. Cullen/Frost Bankers, Inc. (NYSE:CFR) was in 19 hedge funds' portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that CFR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to take a gander at the latest hedge fund action encompassing Cullen/Frost Bankers, Inc. (NYSE:CFR).
Do Hedge Funds Think CFR Is A Good Stock To Buy Now?
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 46% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in CFR a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Noam Gottesman's GLG Partners has the largest position in Cullen/Frost Bankers, Inc. (NYSE:CFR), worth close to $7.6 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $5.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Matthew Hulsizer's PEAK6 Capital Management, John Overdeck and David Siegel's Two Sigma Advisors and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Cullen/Frost Bankers, Inc. (NYSE:CFR), around 0.38% of its 13F portfolio. Cerebellum Capital is also relatively very bullish on the stock, earmarking 0.25 percent of its 13F equity portfolio to CFR.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Cullen/Frost Bankers, Inc. (NYSE:CFR). ExodusPoint Capital had $2.7 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $1.9 million investment in the stock during the quarter. The other funds with brand new CFR positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Donald Sussman's Paloma Partners, and Greg Eisner's Engineers Gate Manager.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Cullen/Frost Bankers, Inc. (NYSE:CFR) but similarly valued. These stocks are Cyberark Software Ltd (NASDAQ:CYBR), Premier Inc (NASDAQ:PINC), Xerox Holdings Corporation (NYSE:XRX), Cameco Corporation (NYSE:CCJ), Janus Henderson Group plc (NYSE:JHG), TriNet Group Inc (NYSE:TNET), and Legend Biotech Corporation (NASDAQ:LEGN). All of these stocks' market caps match CFR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYBR,25,234808,8 PINC,10,160511,-5 XRX,28,828565,-7 CCJ,20,276218,-2 JHG,21,549840,-9 TNET,26,335733,5 LEGN,13,371533,-15 Average,20.4,393887,-3.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $39 million in CFR's case. Xerox Holdings Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand Premier Inc (NASDAQ:PINC) is the least popular one with only 10 bullish hedge fund positions. Cullen/Frost Bankers, Inc. (NYSE:CFR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CFR is 60.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on CFR as the stock returned 35.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.