Hedge Funds Have Never Been This Bullish On Commerce Bancshares, Inc. (CBSH)
In this article we will take a look at whether hedge funds think Commerce Bancshares, Inc. (NASDAQ:CBSH) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Commerce Bancshares, Inc. (NASDAQ:CBSH) a buy here? The smart money is becoming hopeful. The number of long hedge fund positions advanced by 5 in recent months. Our calculations also showed that CBSH isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
To the average investor there are dozens of formulas market participants employ to grade their holdings. A couple of the less known formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best money managers can beat the market by a healthy amount (see the details here).
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Donald Sussman of Paloma Partners[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, We take a look at lists like the 10 stocks that went up during the 2008 crash to identify the companies that are likely to deliver double digit returns in up and down markets. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's go over the new hedge fund action regarding Commerce Bancshares, Inc. (NASDAQ:CBSH).
How are hedge funds trading Commerce Bancshares, Inc. (NASDAQ:CBSH)?
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in CBSH a year ago. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Commerce Bancshares, Inc. (NASDAQ:CBSH). AQR Capital Management has a $22 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $9.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include David Harding's Winton Capital Management, Ken Griffin's Citadel Investment Group and Dmitry Balyasny's Balyasny Asset Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Commerce Bancshares, Inc. (NASDAQ:CBSH), around 0.14% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to CBSH.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Renaissance Technologies, established the most valuable position in Commerce Bancshares, Inc. (NASDAQ:CBSH). Renaissance Technologies had $9.1 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $0.9 million position during the quarter. The other funds with brand new CBSH positions are Donald Sussman's Paloma Partners, Michael Gelband's ExodusPoint Capital, and Noam Gottesman's GLG Partners.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Commerce Bancshares, Inc. (NASDAQ:CBSH) but similarly valued. These stocks are Penumbra Inc (NYSE:PEN), Federal Realty Investment Trust (NYSE:FRT), AMERCO (NASDAQ:UHAL), and argenx SE (NASDAQ:ARGX). All of these stocks' market caps are closest to CBSH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PEN,20,247173,-10 FRT,24,78227,2 UHAL,15,318275,-2 ARGX,25,588505,-1 Average,21,308045,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $45 million in CBSH's case. argenx SE (NASDAQ:ARGX) is the most popular stock in this table. On the other hand AMERCO (NASDAQ:UHAL) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Commerce Bancshares, Inc. (NASDAQ:CBSH) is even less popular than UHAL. Hedge funds dodged a bullet by taking a bearish stance towards CBSH. 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 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. Unfortunately CBSH wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CBSH investors were disappointed as the stock returned 18.5% during the second quarter (through June 25th) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
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