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Hedge Funds Are Warming Up To Canadian Imperial Bank of Commerce (CM)

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Canadian Imperial Bank of Commerce (NYSE:CM).

Canadian Imperial Bank of Commerce (NYSE:CM) was in 15 hedge funds’ portfolios at the end of the third quarter of 2019. CM investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 12 hedge funds in our database with CM positions at the end of the previous quarter. Our calculations also showed that CM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the key hedge fund action regarding Canadian Imperial Bank of Commerce (NYSE:CM).

Hedge fund activity in Canadian Imperial Bank of Commerce (NYSE:CM)

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in CM a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Canadian Imperial Bank of Commerce (NYSE:CM), which was worth $131.3 million at the end of the third quarter. On the second spot was GLG Partners which amassed $27.7 million worth of shares. D E Shaw, Bridgewater Associates, and Millennium Management 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 Signition LP allocated the biggest weight to Canadian Imperial Bank of Commerce (NYSE:CM), around 2.54% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to CM.

Now, key hedge funds were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Canadian Imperial Bank of Commerce (NYSE:CM). Arrowstreet Capital had $8 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $1.4 million position during the quarter. The following funds were also among the new CM investors: Michael Gelband’s ExodusPoint Capital, Matthew Hulsizer’s PEAK6 Capital Management, and Steve Cohen’s Point72 Asset Management.

Let’s now review hedge fund activity in other stocks similar to Canadian Imperial Bank of Commerce (NYSE:CM). These stocks are Ford Motor Company (NYSE:F), Prudential Financial Inc (NYSE:PRU), Manulife Financial Corporation (NYSE:MFC), and Baidu, Inc. (NASDAQ:BIDU). This group of stocks’ market valuations are closest to CM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
F 35 1152594 -4
PRU 27 576526 -6
MFC 17 354745 1
BIDU 43 1745303 -1
Average 30.5 957292 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $957 million. That figure was $220 million in CM’s case. Baidu, Inc. (NASDAQ:BIDU) is the most popular stock in this table. On the other hand Manulife Financial Corporation (NYSE:MFC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Canadian Imperial Bank of Commerce (NYSE:CM) is even less popular than MFC. Hedge funds dodged a bullet by taking a bearish stance towards CM. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CM investors were disappointed as the stock returned 5.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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

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