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 the 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 Cullen/Frost Bankers, Inc. (NYSE:CFR)? The smart money sentiment can provide an answer to this question.
Cullen/Frost Bankers, Inc. (NYSE:CFR) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. Cullen/Frost Bankers, Inc. (NYSE:CFR) was in 15 hedge funds’ portfolios at the end of the third quarter of 2015. There were 11 hedge funds in our database with Cullen/Frost Bankers, Inc. (NYSE:CFR) positions at the end of the previous quarter. At the end of this article, we will also compare Cullen/Frost Bankers, Inc. (NYSE:CFR) to other stocks including Mercadolibre Inc (NASDAQ:MELI), IPG Photonics Corporation (NASDAQ:IPGP), and Casey’s General Stores, Inc. (NASDAQ:CASY) to get a better sense of its popularity.
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According to most investors, hedge funds are seen as worthless, outdated investment vehicles of the past. While there are more than 8000 funds in operation at present, our experts look at the elite of this group, around 700 funds. These hedge fund managers control the bulk of the hedge fund industry’s total capital, and by monitoring their finest picks, Insider Monkey has found various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, let’s check out the recent action encompassing Cullen/Frost Bankers, Inc. (NYSE:CFR).
Hedge fund activity in Cullen/Frost Bankers, Inc. (NYSE:CFR)
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish in this stock, an increase of 36% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management had the most valuable position in Cullen/Frost Bankers, Inc. (NYSE:CFR), worth close to $15.3 million, accounting for less than 0.1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, which held a $12.5 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish comprise Martin Whitman’s Third Avenue Management, Cliff Asness’ AQR Capital Management and Ken Griffin’s Citadel Investment Group.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Citadel Investment Group assembled the most outsized position in Cullen/Frost Bankers, Inc. (NYSE:CFR). Citadel Investment Group had $2.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.7 million position during the quarter. The following funds were also among the new CFR investors: Ray Carroll’s Breton Hill Capital, George Hall’s Clinton Group, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt..
Let’s go over hedge fund activity in other stocks similar to Cullen/Frost Bankers, Inc. (NYSE:CFR). We will take a look at Mercadolibre Inc (NASDAQ:MELI), IPG Photonics Corporation (NASDAQ:IPGP), Casey’s General Stores, Inc. (NASDAQ:CASY), and Pitney Bowes Inc. (NYSE:PBI). This group of stocks’ market caps resemble Cullen/Frost Bankers, Inc. (NYSE:CFR)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $51 millions in Cullen/Frost Bankers, Inc. (NYSE:CFR)’s case. IPG Photonics Corporation (NASDAQ:IPGP) is the most popular stock in this table. On the other hand, Mercadolibre Inc (NASDAQ:MELI) is the least popular one with only 14 bullish hedge fund positions. Cullen/Frost Bankers, Inc. (NYSE:CFR) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IPG Photonics Corporation (NASDAQ:IPGP) might be a better candidate to consider a long position.