U.S. Markets closed

Hedge Funds Have Never Been This Bullish On Commerce Bancshares, Inc. (CBSH)

Reymerlyn Martin

We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of Commerce Bancshares, Inc. (NASDAQ:CBSH).

Is Commerce Bancshares, Inc. (NASDAQ:CBSH) an attractive stock to buy now? Prominent investors are taking an optimistic view. The number of bullish hedge fund positions advanced by 2 lately. Our calculations also showed that CBSH isn't among the 30 most popular stocks among hedge funds. CBSH was in 13 hedge funds' portfolios at the end of March. There were 11 hedge funds in our database with CBSH holdings at the end of the previous quarter.

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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

BlueMountain Capital Management's Returns, AUM and Holdings

Let's check out the recent hedge fund action surrounding Commerce Bancshares, Inc. (NASDAQ:CBSH).

What does smart money think about Commerce Bancshares, Inc. (NASDAQ:CBSH)?

Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CBSH over the last 15 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CBSH_jun2019

Of the funds tracked by Insider Monkey, Cliff Asness's AQR Capital Management has the largest position in Commerce Bancshares, Inc. (NASDAQ:CBSH), worth close to $18.8 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $14.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Jim Simons's Renaissance Technologies, Israel Englander's Millennium Management and Michael Gelband's ExodusPoint Capital.

Now, key hedge funds were leading the bulls' herd. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Commerce Bancshares, Inc. (NASDAQ:CBSH). ExodusPoint Capital had $2.2 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $0.8 million position during the quarter. The only other fund with a new position in the stock is Andrew Feldstein and Stephen Siderow's Blue Mountain Capital.

Let's now take a look at hedge fund activity in other stocks similar to Commerce Bancshares, Inc. (NASDAQ:CBSH). These stocks are Galapagos NV (NASDAQ:GLPG), Hubbell Incorporated (NYSE:HUBB), LATAM Airlines Group S.A. (NYSE:LTM), and Autoliv Inc. (NYSE:ALV). This group of stocks' market values are closest to CBSH's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GLPG,16,131126,1 HUBB,21,357892,-3 LTM,8,21281,0 ALV,13,444882,0 Average,14.5,238795,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $48 million in CBSH's case. Hubbell Incorporated (NYSE:HUBB) is the most popular stock in this table. On the other hand LATAM Airlines Group S.A. (NYSE:LTM) is the least popular one with only 8 bullish hedge fund positions. Commerce Bancshares, Inc. (NASDAQ:CBSH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CBSH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CBSH investors were disappointed as the stock returned 0.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

Related Content