Did Hedge Funds Drop The Ball On Comerica Incorporated (CMA) ?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Comerica Incorporated (NYSE:CMA).

Is Comerica Incorporated (NYSE:CMA) a safe investment today? The best stock pickers are reducing their bets on the stock. The number of bullish hedge fund bets dropped by 1 recently. Our calculations also showed that CMA isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are numerous tools shareholders employ to size up publicly traded companies. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a very impressive amount (see the details here).

BlueMountain Capital Management's Returns, AUM and Holdings

Let’s take a look at the recent hedge fund action surrounding Comerica Incorporated (NYSE:CMA).

What does the smart money think about Comerica Incorporated (NYSE:CMA)?

At the end of the fourth quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CMA over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


More specifically, Millennium Management was the largest shareholder of Comerica Incorporated (NYSE:CMA), with a stake worth $232.4 million reported as of the end of September. Trailing Millennium Management was Two Sigma Advisors, which amassed a stake valued at $127 million. Arrowstreet Capital, Renaissance Technologies, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that Comerica Incorporated (NYSE:CMA) has faced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of money managers that elected to cut their full holdings in the third quarter. Intriguingly, Clint Carlson’s Carlson Capital cut the largest stake of the 700 funds watched by Insider Monkey, comprising close to $39.6 million in stock, and Fred Cummings’s Elizabeth Park Capital Management was right behind this move, as the fund cut about $13.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Comerica Incorporated (NYSE:CMA) but similarly valued. These stocks are Vistra Energy Corp. (NYSE:VST), Seagate Technology plc (NASDAQ:STX), Burlington Stores Inc (NYSE:BURL), and Lincoln National Corporation (NYSE:LNC). This group of stocks’ market values are closest to CMA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VST 44 3132642 6
STX 26 1673603 -1
BURL 30 854880 -5
LNC 33 575085 0
Average 33.25 1559053 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $1559 million. That figure was $743 million in CMA’s case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Seagate Technology plc (NASDAQ:STX) is the least popular one with only 26 bullish hedge fund positions. Comerica Incorporated (NYSE:CMA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. A handful of hedge funds were also right about betting on CMA as the stock returned 20.7% and outperformed the market as well. You can see the entire list of these shrewd hedge funds here.

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