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Cullen/Frost Bankers, Inc. (CFR): Hedge Funds Sticking Around

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Cullen/Frost Bankers, Inc. (NYSE:CFR) based on that data.

Cullen/Frost Bankers, Inc. (NYSE:CFR) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of March. At the end of this article we will also compare CFR to other stocks including First Citizens BancShares Inc. (NASDAQ:FCNCA), The Hanover Insurance Group, Inc. (NYSE:THG), and Switch, Inc. (NYSE:SWCH) to get a better sense of its popularity.

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BRIDGEWATER ASSOCIATES

Ray Dalio of Bridgewater Associates

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the latest hedge fund action regarding Cullen/Frost Bankers, Inc. (NYSE:CFR).

How have hedgies been trading Cullen/Frost Bankers, Inc. (NYSE:CFR)?

Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in CFR a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Is CFR A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of Cullen/Frost Bankers, Inc. (NYSE:CFR), with a stake worth $7.2 million reported as of the end of September. Trailing Citadel Investment Group was Two Sigma Advisors, which amassed a stake valued at $4.7 million. Millennium Management, AQR Capital Management, and Arrowstreet Capital 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 Swift Run Capital Management allocated the biggest weight to Cullen/Frost Bankers, Inc. (NYSE:CFR), around 0.96% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, designating 0.35 percent of its 13F equity portfolio to CFR.

Judging by the fact that Cullen/Frost Bankers, Inc. (NYSE:CFR) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who sold off their full holdings heading into Q4. It’s worth mentioning that Carson Yost’s Yost Capital Management dumped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling about $17.4 million in stock. Ray Dalio’s fund, Bridgewater Associates, also sold off its stock, about $1.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Cullen/Frost Bankers, Inc. (NYSE:CFR). We will take a look at First Citizens BancShares Inc. (NASDAQ:FCNCA), The Hanover Insurance Group, Inc. (NYSE:THG), Switch, Inc. (NYSE:SWCH), and TCF Financial Corporation (NYSE:TCF). This group of stocks’ market values are closest to CFR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FCNCA 17 129488 -6
THG 24 134965 3
SWCH 24 394487 6
TCF 19 100615 -5
Average 21 189889 -0.5

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 $190 million. That figure was $40 million in CFR’s case. The Hanover Insurance Group, Inc. (NYSE:THG) is the most popular stock in this table. On the other hand First Citizens BancShares Inc. (NASDAQ:FCNCA) is the least popular one with only 17 bullish hedge fund positions. Cullen/Frost Bankers, Inc. (NYSE:CFR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on CFR as the stock returned 41.7% during the second quarter and outperformed the market by an even larger margin.

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