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Why Capitol Federal Financial (CFFN) Stock is a Compelling Investment Case

Palm Valley Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 0.89% for the quarter, underperforming its benchmark, the S&P Small Cap 600 Index which returned 3.17% in the same quarter. You should check out Palm Valley Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Palm Valley Capital highlighted a few stocks and Capitol Federal Financial Inc. (NASDAQ:CFFN) is one of them. Capitol Federal Financial Inc. (NASDAQ:CFFN) is a holding company, which operates as a community-oriented financial institution. Year-to-date, Capitol Federal Financial Inc. (NASDAQ:CFFN) stock lost 20.7% and on October 6th it had a closing price of $10.63. Here is what Palm Valley Capital said:

“Capitol Federal Financial is a savings bank headquartered in Topeka, Kansas that was founded in 1893. The firm has significantly less exposure to commercial real estate than its small cap peers, instead preferring to focus on mortgages for single-family homes. The bank is overcapitalized and pays out special dividends in most years. As a result of the lockdowns, management offered forbearance to many of its commercial customers. This, along with overall pressure on the sector, pushed the stock price and valuation down to multiyear lows.”

Ghost Tree Capital's AUM, Returns and Holdings

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In Q1 2020, the number of bullish hedge fund positions on Capitol Federal Financial Inc. (NASDAQ:CFFN) stock decreased by about 31% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Capitol Federal Financial’s growth potential. Our calculations showed that Capitol Federal Financial Inc. (NASDAQ:CFFN) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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