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In this article we will check out the progression of hedge fund sentiment towards CrossFirst Bankshares, Inc. (NASDAQ:CFB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
CrossFirst Bankshares, Inc. (NASDAQ:CFB) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of March. At the end of this article we will also compare CFB to other stocks including Kimball International Inc (NASDAQ:KBAL), Merchants Bancorp (NASDAQ:MBIN), and Ichor Holdings (NASDAQ:ICHR) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are numerous metrics investors employ to analyze their stock investments. Two of the less utilized metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top investment managers can outperform the S&P 500 by a solid margin (see the details here).
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Matthew Halbower of Pentwater Capital[/caption]
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. With all of this in mind we're going to take a look at the new hedge fund action regarding CrossFirst Bankshares, Inc. (NASDAQ:CFB).
What does smart money think about CrossFirst Bankshares, Inc. (NASDAQ:CFB)?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 0 hedge funds with a bullish position in CFB a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CrossFirst Bankshares, Inc. (NASDAQ:CFB) was held by EJF Capital, which reported holding $7.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.3 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and PDT Partners. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to CrossFirst Bankshares, Inc. (NASDAQ:CFB), around 1.61% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CFB.
Since CrossFirst Bankshares, Inc. (NASDAQ:CFB) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there lies a certain "tier" of hedgies that slashed their positions entirely heading into Q4. Intriguingly, Anton Schutz's Mendon Capital Advisors cut the biggest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $5.7 million in stock. Matthew Halbower's fund, Pentwater Capital Management, also said goodbye to its stock, about $0.4 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as CrossFirst Bankshares, Inc. (NASDAQ:CFB) but similarly valued. We will take a look at Kimball International Inc (NASDAQ:KBAL), Merchants Bancorp (NASDAQ:MBIN), Ichor Holdings (NASDAQ:ICHR), and American Vanguard Corp. (NYSE:AVD). This group of stocks' market valuations resemble CFB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KBAL,12,79326,0 MBIN,8,9811,-1 ICHR,14,33383,-1 AVD,8,15829,2 Average,10.5,34587,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $9 million in CFB's case. Ichor Holdings (NASDAQ:ICHR) is the most popular stock in this table. On the other hand Merchants Bancorp (NASDAQ:MBIN) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks CrossFirst Bankshares, Inc. (NASDAQ:CFB) is even less popular than MBIN. Hedge funds dodged a bullet by taking a bearish stance towards CFB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately CFB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CFB investors were disappointed as the stock returned 15.2% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.