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We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Comerica Incorporated (NYSE:CMA) based on that data.
Is CMA a good stock to buy? Comerica Incorporated (NYSE:CMA) shareholders have witnessed a decrease in support from the world's most elite money managers of late. Comerica Incorporated (NYSE:CMA) was in 30 hedge funds' portfolios at the end of September. The all time high for this statistic is 49. There were 36 hedge funds in our database with CMA positions at the end of the second quarter. Our calculations also showed that CMA 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 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 S&P 500 ETFs by 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 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.
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 let's take a look at the new hedge fund action encompassing Comerica Incorporated (NYSE:CMA).
Do Hedge Funds Think CMA Is A Good Stock To Buy Now?
At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CMA over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Comerica Incorporated (NYSE:CMA), with a stake worth $113.9 million reported as of the end of September. Trailing Citadel Investment Group was Arrowstreet Capital, which amassed a stake valued at $51.2 million. Adage Capital Management, D E Shaw, and Two Sigma Advisors 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 MSDC Management allocated the biggest weight to Comerica Incorporated (NYSE:CMA), around 4.88% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, designating 3.28 percent of its 13F equity portfolio to CMA.
Since Comerica Incorporated (NYSE:CMA) has experienced bearish sentiment from hedge fund managers, we can see that there is a sect of funds who sold off their full holdings in the third quarter. At the top of the heap, Brandon Haley's Holocene Advisors said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, worth close to $19.7 million in stock, and Jeffrey Altman's Owl Creek Asset Management was right behind this move, as the fund dumped about $12.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Comerica Incorporated (NYSE:CMA) but similarly valued. These stocks are Elbit Systems Ltd. (NASDAQ:ESLT), Canopy Growth Corporation (NASDAQ:CGC), Woori Financial Group Inc. (NYSE:WF), Vivint Solar Inc (NYSE:VSLR), Levi Strauss & Co. (NYSE:LEVI), CDK Global Inc (NASDAQ:CDK), and ServiceMaster Global Holdings Inc (NYSE:SERV). This group of stocks' market valuations are similar to CMA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESLT,4,10024,0 CGC,9,19074,-2 WF,2,2940,-3 VSLR,23,736401,11 LEVI,17,51394,1 CDK,28,324989,-4 SERV,30,626002,-5 Average,16.1,252975,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $454 million in CMA's case. ServiceMaster Global Holdings Inc (NYSE:SERV) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 2 bullish hedge fund positions. Comerica Incorporated (NYSE:CMA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMA is 67.4. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on CMA as the stock returned 39.4% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.