Hedge Funds Are Dumping BancFirst Corporation (BANF)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in BancFirst Corporation (NASDAQ:BANF)? The smart money sentiment can provide an answer to this question.

Is BancFirst Corporation (NASDAQ:BANF) a superb investment now? Prominent investors were selling. The number of long hedge fund bets fell by 9 recently. BancFirst Corporation (NASDAQ:BANF) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that BANF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 13 hedge funds in our database with BANF positions at the end of the second quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to view the recent hedge fund action regarding BancFirst Corporation (NASDAQ:BANF).

What does smart money think about BancFirst Corporation (NASDAQ:BANF)?

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -69% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BANF over the last 21 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is BANF A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in BancFirst Corporation (NASDAQ:BANF). Millennium Management has a $1.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Millennium Management’s heels is Ken Griffin of Citadel Investment Group, with a $1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’s AQR Capital Management and . In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to BancFirst Corporation (NASDAQ:BANF), around 0.0019% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0018 percent of its 13F equity portfolio to BANF.

Since BancFirst Corporation (NASDAQ:BANF) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few money managers who were dropping their positions entirely last quarter. At the top of the heap, Amy Minella’s Cardinal Capital cut the largest position of all the hedgies watched by Insider Monkey, worth close to $13.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $3.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 9 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BancFirst Corporation (NASDAQ:BANF) but similarly valued. We will take a look at Sirius International Insurance Group, Ltd. (NASDAQ:SG), Gray Television, Inc. (NYSE:GTN), Sangamo Therapeutics, Inc. (NASDAQ:SGMO), So-Young International Inc. (NASDAQ:SY), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), and Silicon Motion Technology Corp. (NASDAQ:SIMO). All of these stocks’ market caps match BANF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SG 6 8559 4
GTN 25 114310 -1
SGMO 28 122664 6
SY 7 15987 0
ARI 14 32597 4
MDRX 22 129055 6
SIMO 15 216253 -2
Average 16.7 91346 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $3 million in BANF’s case. Sangamo Therapeutics, Inc. (NASDAQ:SGMO) is the most popular stock in this table. On the other hand Sirius International Insurance Group, Ltd. (NASDAQ:SG) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks BancFirst Corporation (NASDAQ:BANF) is even less popular than SG. Our overall hedge fund sentiment score for BANF is 5.2. 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. Hedge funds clearly dropped the ball on BANF as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on BANF as the stock returned 40.2% since Q3 (through November 27th) and outperformed the market by an even larger margin.

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