Did Hedge Funds Make The Right Call On BOK Financial Corporation (BOKF) ?

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 BOK Financial Corporation (NASDAQ:BOKF) based on that data and determine whether they were really smart about the stock.

Is BOK Financial Corporation (NASDAQ:BOKF) undervalued? The best stock pickers were becoming more confident. The number of long hedge fund bets rose by 7 in recent months. Our calculations also showed that BOKF 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. 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 outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Rogers Ariel Investments

John Rogers of Ariel Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. With all of this in mind let’s take a look at the latest hedge fund action encompassing BOK Financial Corporation (NASDAQ:BOKF).

What does smart money think about BOK Financial Corporation (NASDAQ:BOKF)?

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BOKF over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in BOK Financial Corporation (NASDAQ:BOKF) was held by Ariel Investments, which reported holding $58.3 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $40.7 million position. Other investors bullish on the company included Royce & Associates, Millennium Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to BOK Financial Corporation (NASDAQ:BOKF), around 1.02% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, designating 0.4 percent of its 13F equity portfolio to BOKF.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in BOK Financial Corporation (NASDAQ:BOKF). Arrowstreet Capital had $5.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new BOKF investors: D. E. Shaw’s D E Shaw, Emanuel J. Friedman’s EJF Capital, and Cliff Asness’s AQR Capital Management.

Let’s go over hedge fund activity in other stocks similar to BOK Financial Corporation (NASDAQ:BOKF). These stocks are FirstCash, Inc. (NASDAQ:FCFS), Anixter International Inc. (NYSE:AXE), Emergent Biosolutions Inc (NYSE:EBS), and NIO Inc. (NYSE:NIO). This group of stocks’ market valuations are closest to BOKF’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FCFS 16 107030 0
AXE 21 541008 -22
EBS 17 114485 5
NIO 16 29111 0
Average 17.5 197909 -4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $145 million in BOKF’s case. Anixter International Inc. (NYSE:AXE) is the most popular stock in this table. On the other hand FirstCash, Inc. (NASDAQ:FCFS) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks BOK Financial Corporation (NASDAQ:BOKF) is more popular among hedge funds. 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BOKF as the stock returned 34.1% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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