Do Hedge Funds Love Comerica Incorporated (CMA)?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Comerica Incorporated (NYSE:CMA).

Is Comerica Incorporated (NYSE:CMA) a cheap investment now? The best stock pickers were getting less optimistic. The number of long hedge fund bets decreased by 2 recently. Comerica Incorporated (NYSE:CMA) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 49. Our calculations also showed that CMA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Comerica Incorporated (NYSE:CMA).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

Do Hedge Funds Think CMA Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards CMA over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Citadel Investment Group held the most valuable stake in Comerica Incorporated (NYSE:CMA), which was worth $146.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $102.7 million worth of shares. Adage Capital Management, Schonfeld Strategic Advisors, and LMR Partners 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 Third Avenue Management allocated the biggest weight to Comerica Incorporated (NYSE:CMA), around 4.03% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, designating 3.93 percent of its 13F equity portfolio to CMA.

Seeing as Comerica Incorporated (NYSE:CMA) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Clint Carlson’s Carlson Capital cut the largest investment of the 750 funds monitored by Insider Monkey, totaling an estimated $12.9 million in stock. Fred Cummings’s fund, Elizabeth Park Capital Management, also said goodbye to its stock, about $2.5 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Comerica Incorporated (NYSE:CMA). We will take a look at Marathon Oil Corporation (NYSE:MRO), Teva Pharmaceutical Industries Limited (NYSE:TEVA), Booz Allen Hamilton Holding Corporation (NYSE:BAH), StoneCo Ltd. (NASDAQ:STNE), Builders FirstSource, Inc. (NYSE:BLDR), American Financial Group, Inc. (NYSE:AFG), and Henry Schein, Inc. (NASDAQ:HSIC). This group of stocks’ market caps are closest to CMA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $1172 million. That figure was $645 million in CMA’s case. Builders FirstSource, Inc. (NYSE:BLDR) is the most popular stock in this table. On the other hand Teva Pharmaceutical Industries Limited (NYSE:TEVA) is the least popular one with only 22 bullish hedge fund positions. Comerica Incorporated (NYSE:CMA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CMA is 36.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately CMA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CMA investors were disappointed as the stock returned 2.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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