Is Comerica Incorporated (CMA) Going to Burn These Hedge Funds?

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Comerica Incorporated (NYSE:CMA).

Comerica Incorporated (NYSE:CMA) shareholders have witnessed a decrease in enthusiasm from smart money recently. At the end of this article we will also compare CMA to other stocks including Splunk Inc (NASDAQ:SPLK), Alaska Air Group, Inc. (NYSE:ALK), and Open Text Corporation (USA) (NASDAQ:OTEX) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, let’s go over the recent action regarding Comerica Incorporated (NYSE:CMA).

Hedge fund activity in Comerica Incorporated (NYSE:CMA)

Heading into the fourth quarter of 2016, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the previous quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the most valuable position in Comerica Incorporated (NYSE:CMA), worth close to $115.9 million, accounting for 0.7% of its total 13F portfolio. Coming in second is Millennium Management, led by Israel Englander, holding a $84.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish encompass Martin Whitman’s Third Avenue Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’ AQR Capital Management.

Since Comerica Incorporated (NYSE:CMA) has witnessed bearish sentiment from hedge fund managers, we can see that there exists a select few fund managers that decided to sell off their entire stakes heading into Q4. Intriguingly, Daniel S. Och’s OZ Management cut the biggest investment of all the hedgies tracked by Insider Monkey, totaling close to $65.8 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dumped about $21.6 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Comerica Incorporated (NYSE:CMA). These stocks are Splunk Inc (NASDAQ:SPLK), Alaska Air Group, Inc. (NYSE:ALK), Open Text Corporation (USA) (NASDAQ:OTEX), and Western Gas Partners, LP (NYSE:WES). All of these stocks’ market caps match CMA’s market cap.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $454 million. That figure was $852 million in CMA’s case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Western Gas Partners, LP (NYSE:WES) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Comerica Incorporated (NYSE:CMA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.