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Here’s Why Cullen/Frost Bankers (CFR) was Eliminated in Third Avenue’s Holdings

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·3 min read
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Third Avenue Management, an investment management firm, published its “Small-Cap Value Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 18.51% was recorded by the fund for the Q1 of 2021, below the Fund’s most relevant benchmark, Russell 2000 Value Index, that rose to 21.17% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Third Avenue Management, in its Small-Cap Value Fund Q1 2021 investor letter, mentioned Cullen/Frost Bankers, Inc. (NYSE: CFR), and shared their insights on the company. Cullen/Frost Bankers, Inc. is a San Antonio, Texas-based bank holding company that currently has a $7.7 billion market capitalization. Since the beginning of the year, CFR delivered a 39.48% return, extending its 12-month gains to 106.07%. As of May 11, 2021, the stock closed at $120.80 per share.

Here is what Third Avenue Management has to say about Cullen/Frost Bankers, Inc. in its Q1 2021 investor letter:

"Two positions were eliminated during the quarter (which includes) Cullen/Frost Bankers. Cullen/Frost has been a long-time holding of the Fund and has compounded book value at high rates over the holding period. The company’s market capitalization was approaching $7 billion when we exited the position. When market capitalizations of positions rise above $4 billion, Fund Management does not automatically sell, but when the risk-return tradeoff of a high-market capitalization position narrows, it makes doing so much easier, and that was the case with Cullen/Frost."

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Our calculations show that Cullen/Frost Bankers, Inc. (NYSE: CFR) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Cullen/Frost Bankers, Inc. was in 17 hedge fund portfolios, compared to 19 funds in the third quarter. CFR delivered a 22.24% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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