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Were Hedge Funds Right About Piling Into BancFirst Corporation (BANF)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtBancFirst Corporation (NASDAQ:BANF) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

BancFirst Corporation (NASDAQ:BANF) shareholders have witnessed an increase in hedge fund interest lately. Our calculations also showed that BANF 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.

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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the latest hedge fund action encompassing BancFirst Corporation (NASDAQ:BANF).

How have hedgies been trading BancFirst Corporation (NASDAQ:BANF)?

At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in BANF a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

The largest stake in BancFirst Corporation (NASDAQ:BANF) was held by Cardinal Capital, which reported holding $11 million worth of stock at the end of September. It was followed by Millennium Management with a $5.7 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to BancFirst Corporation (NASDAQ:BANF), around 0.54% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to BANF.

Now, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in BancFirst Corporation (NASDAQ:BANF). Citadel Investment Group had $1.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, D. E. Shaw’s D E Shaw, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BancFirst Corporation (NASDAQ:BANF) but similarly valued. These stocks are Dril-Quip, Inc. (NYSE:DRQ), TTM Technologies, Inc. (NASDAQ:TTMI), Editas Medicine, Inc. (NASDAQ:EDIT), and Universal Corp (NYSE:UVV). This group of stocks’ market values are closest to BANF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DRQ 13 82214 -8
TTMI 10 64174 -1
EDIT 16 79121 2
UVV 9 65327 -5
Average 12 72709 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $30 million in BANF’s case. Editas Medicine, Inc. (NASDAQ:EDIT) is the most popular stock in this table. On the other hand Universal Corp (NYSE:UVV) is the least popular one with only 9 bullish hedge fund positions. BancFirst Corporation (NASDAQ:BANF) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on BANF, though not to the same extent, as the stock returned 22.6% during the second quarter and outperformed the market.

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