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First Financial Bankshares (FFIN) Is Too Expensive Given Earnings Doubts

Alex Smith
·3 mins read

Diamond Hill Capital recently released its Q1 2020 Investor Letter, a copy of which you can download below. The Diamond Hill Small Cap Fund posted a return of -36.17% for the quarter, underperforming its benchmark, the Russell 2000 Index which returned -30.61% in the same quarter. You should check out Diamond Hill Capital's top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, Diamond Hill Capital highlighted a few stocks and First Financial Bankshares Inc (NASDAQ:FFIN) is one of them. First Financial Bankshares is a multi-bank holding company. Year-to-date, First Financial Bankshares Inc (NASDAQ:FFIN) stock lost 7.6% and on June 8th it had a closing price of $32.97. Here is what Diamond Hill Capital said:

"First Financial Bankshares, Inc. is a Texas-based bank trading at a premium to our estimate of intrinsic value. We don’t believe the market price reflects the increased regulatory expenses the bank will face once it exceeds $10 billion in assets. In addition, there are fewer acquisition target available now for the bank to continue its historical growth."

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money icon, bank background, bank symbol, business, banking sign, bank concept, concept, finance background, banking icons, symbol, copyspace, black and white, tone, financial services, finance, banking symbol, bank building,

In Q4 2019, the number of bullish hedge fund positions on First Financial Bankshares Inc (NASDAQ:FFIN) stock decreased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with FFIN's downside potential. Our calculations showed that First Financial Bankshares Inc (NASDAQ:FFIN) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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