The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtCapitol Federal Financial, Inc. (NASDAQ:CFFN) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Capitol Federal Financial, Inc. (NASDAQ:CFFN) a splendid investment today? Investors who are in the know were becoming less hopeful. The number of bullish hedge fund bets were trimmed by 5 in recent months. Our calculations also showed that CFFN 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 methods investors use to size up their stock investments. A duo of the most underrated methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a healthy margin (see the details here).
[caption id="attachment_25717" align="aligncenter" width="400"] Steven Cohen of Point72 Asset Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. 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 we're going to take a look at the new hedge fund action regarding Capitol Federal Financial, Inc. (NASDAQ:CFFN).
Hedge fund activity in Capitol Federal Financial, Inc. (NASDAQ:CFFN)
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in CFFN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Capitol Federal Financial, Inc. (NASDAQ:CFFN) was held by Renaissance Technologies, which reported holding $95.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $3.8 million position. Other investors bullish on the company included D E Shaw, Millennium Management, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Capitol Federal Financial, Inc. (NASDAQ:CFFN), around 0.09% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to CFFN.
Judging by the fact that Capitol Federal Financial, Inc. (NASDAQ:CFFN) has experienced falling interest from the smart money, we can see that there is a sect of funds who were dropping their positions entirely heading into Q4. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the largest position of the "upper crust" of funds tracked by Insider Monkey, valued at close to $7.8 million in stock. Robert Rodriguez and Steven Romick's fund, First Pacific Advisors LLC, also cut its stock, about $5.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Capitol Federal Financial, Inc. (NASDAQ:CFFN) but similarly valued. We will take a look at CONMED Corporation (NASDAQ:CNMD), Acadia Healthcare Company Inc (NASDAQ:ACHC), Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), and Ambarella Inc (NASDAQ:AMBA). This group of stocks' market values resemble CFFN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNMD,29,207132,-2 ACHC,24,272616,-4 AUPH,28,482900,7 AMBA,21,161557,-5 Average,25.5,281051,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $281 million. That figure was $109 million in CFFN's case. CONMED Corporation (NASDAQ:CNMD) is the most popular stock in this table. On the other hand Ambarella Inc (NASDAQ:AMBA) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Capitol Federal Financial, Inc. (NASDAQ:CFFN) is even less popular than AMBA. Hedge funds dodged a bullet by taking a bearish stance towards CFFN. 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 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately CFFN wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CFFN investors were disappointed as the stock returned -4.5% during the second quarter 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.