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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of CrossFirst Bankshares, Inc. (NASDAQ:CFB).
CrossFirst Bankshares, Inc. (NASDAQ:CFB) shareholders have witnessed a decrease in hedge fund sentiment recently. CrossFirst Bankshares, Inc. (NASDAQ:CFB) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. There were 7 hedge funds in our database with CFB positions at the end of the fourth quarter. Our calculations also showed that CFB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Emanuel Friedman of EJF Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's view the new hedge fund action regarding CrossFirst Bankshares, Inc. (NASDAQ:CFB).
Do Hedge Funds Think CFB Is A Good Stock To Buy Now?
At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in CFB a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, EJF Capital held the most valuable stake in CrossFirst Bankshares, Inc. (NASDAQ:CFB), which was worth $12.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $1.1 million worth of shares. Renaissance Technologies, Engineers Gate Manager, and PDT Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to CrossFirst Bankshares, Inc. (NASDAQ:CFB), around 0.91% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to CFB.
Due to the fact that CrossFirst Bankshares, Inc. (NASDAQ:CFB) has experienced falling interest from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of funds that decided to sell off their entire stakes in the first quarter. Intriguingly, Paul Tudor Jones's Tudor Investment Corp said goodbye to the largest position of the "upper crust" of funds watched by Insider Monkey, valued at about $0.3 million in stock. D. E. Shaw's fund, D E Shaw, also dropped its stock, about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds in the first quarter.
Let's go over hedge fund activity in other stocks similar to CrossFirst Bankshares, Inc. (NASDAQ:CFB). We will take a look at Vaxart, Inc. (NASDAQ:VXRT), Hawkins, Inc. (NASDAQ:HWKN), Golden Entertainment Inc (NASDAQ:GDEN), Gladstone Commercial Corporation (NASDAQ:GOOD), TrustCo Bank Corp NY (NASDAQ:TRST), Ducommun Incorporated (NYSE:DCO), and SpartanNash Company (NASDAQ:SPTN). This group of stocks' market caps are closest to CFB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VXRT,6,5814,-3 HWKN,9,16505,0 GDEN,18,142230,5 GOOD,7,49377,-2 TRST,15,31323,2 DCO,8,68823,-4 SPTN,11,42421,-2 Average,10.6,50928,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $15 million in CFB's case. Golden Entertainment Inc (NASDAQ:GDEN) is the most popular stock in this table. On the other hand Vaxart, Inc. (NASDAQ:VXRT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks CrossFirst Bankshares, Inc. (NASDAQ:CFB) is even less popular than VXRT. Our overall hedge fund sentiment score for CFB is 24.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th but managed to beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on CFB, though not to the same extent, as the stock returned 7.8% since the end of March (through June 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.