Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
BancFirst Corporation (NASDAQ:BANF) has seen an increase in activity from the world’s largest hedge funds recently. BANF was in 9 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 7 hedge funds in our database with BANF holdings at the end of the previous quarter. Our calculations also showed that banf isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
Let’s take a glance at the latest hedge fund action encompassing BancFirst Corporation (NASDAQ:BANF).
Hedge fund activity in BancFirst Corporation (NASDAQ:BANF)
At Q4’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in BANF a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in BancFirst Corporation (NASDAQ:BANF) was held by Cardinal Capital, which reported holding $18.1 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $11.7 million position. Other investors bullish on the company included AQR Capital Management, Millennium Management, and Citadel Investment Group.
As industrywide interest jumped, specific money managers were breaking ground themselves. Zebra Capital Management, managed by Roger Ibbotson, assembled the biggest position in BancFirst Corporation (NASDAQ:BANF). Zebra Capital Management had $0.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $0.2 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to BancFirst Corporation (NASDAQ:BANF). We will take a look at FBL Financial Group, Inc. (NYSE:FFG), BP Midstream Partners LP (NYSE:BPMP), AeroVironment, Inc. (NASDAQ:AVAV), and Comfort Systems USA, Inc. (NYSE:FIX). This group of stocks’ market valuations are closest to BANF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FFG | 6 | 4443 | 2 |
| BPMP | 3 | 42610 | -1 |
| AVAV | 9 | 33016 | -4 |
| FIX | 24 | 176595 | 2 |
| Average | 10.5 | 64166 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $40 million in BANF’s case. Comfort Systems USA, Inc. (NYSE:FIX) is the most popular stock in this table. On the other hand BP Midstream Partners LP (NYSE:BPMP) is the least popular one with only 3 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. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately BANF wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); BANF investors were disappointed as the stock returned 13.4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
