Is CrossFirst Bankshares, Inc. (NASDAQ:CFB) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
CrossFirst Bankshares, Inc. (NASDAQ:CFB) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that CFB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of indicators stock traders put to use to appraise stocks. A couple of the most innovative indicators are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top fund managers can beat the broader indices by a healthy margin (see the details here).
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s view the new hedge fund action encompassing CrossFirst Bankshares, Inc. (NASDAQ:CFB).
How have hedgies been trading CrossFirst Bankshares, Inc. (NASDAQ:CFB)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6 from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CFB over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, EJF Capital, managed by Emanuel J. Friedman, holds the largest position in CrossFirst Bankshares, Inc. (NASDAQ:CFB). EJF Capital has a $13.1 million position in the stock, comprising 1.8% of its 13F portfolio. Sitting at the No. 2 spot is Anton Schutz of Mendon Capital Advisors, with a $5.7 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Israel Englander’s Millennium Management, Matthew Halbower’s Pentwater Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to CrossFirst Bankshares, Inc. (NASDAQ:CFB), around 1.78% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, dishing out 0.96 percent of its 13F equity portfolio to CFB.
As aggregate interest increased, some big names were leading the bulls’ herd. EJF Capital, managed by Emanuel J. Friedman, initiated the biggest position in CrossFirst Bankshares, Inc. (NASDAQ:CFB). EJF Capital had $13.1 million invested in the company at the end of the quarter. Anton Schutz’s Mendon Capital Advisors also initiated a $5.7 million position during the quarter. The other funds with brand new CFB positions are Israel Englander’s Millennium Management, Matthew Halbower’s Pentwater Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now review hedge fund activity in other stocks similar to CrossFirst Bankshares, Inc. (NASDAQ:CFB). These stocks are Sturm, Ruger & Company (NYSE:RGR), Oaktree Specialty Lending Corporation (NASDAQ:OCSL), Regis Corporation (NYSE:RGS), and Live Oak Bancshares Inc (NASDAQ:LOB). This group of stocks’ market caps resemble CFB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RGR | 16 | 88127 | 3 |
| OCSL | 18 | 74388 | 1 |
| RGS | 13 | 289738 | -1 |
| LOB | 10 | 36893 | 4 |
| Average | 14.25 | 122287 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $20 million in CFB’s case. Oaktree Specialty Lending Corporation (NASDAQ:OCSL) is the most popular stock in this table. On the other hand Live Oak Bancshares Inc (NASDAQ:LOB) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks CrossFirst Bankshares, Inc. (NASDAQ:CFB) is even less popular than LOB. Hedge funds dodged a bullet by taking a bearish stance towards CFB. 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 CFB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CFB investors were disappointed as the stock returned -7.3% 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.