Was The Smart Money Right About Comerica Incorporated (CMA)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Comerica Incorporated (NYSE:CMA) based on that data and determine whether they were really smart about the stock.

Is Comerica Incorporated (NYSE:CMA) a buy here? Investors who are in the know were in a bearish mood. The number of bullish hedge fund bets shrunk by 2 in recent months. 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). There were 33 hedge funds in our database with CMA positions at the end of the second quarter.

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. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing Comerica Incorporated (NYSE:CMA).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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

At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CMA over the last 25 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in Comerica Incorporated (NYSE:CMA) was held by Citadel Investment Group, which reported holding $146.8 million worth of stock at the end of September. It was followed by Millennium Management with a $102.7 million position. Other investors bullish on the company included Adage Capital Management, Schonfeld Strategic Advisors, and LMR Partners. 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.

Because Comerica Incorporated (NYSE:CMA) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who sold off their full holdings by the end of the third quarter. At the top of the heap, Clint Carlson’s Carlson Capital sold off the largest stake of the 750 funds monitored by Insider Monkey, totaling close to $12.9 million in stock. Fred Cummings’s fund, Elizabeth Park Capital Management, also cut its stock, about $2.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Comerica Incorporated (NYSE:CMA). These stocks are 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). All of these stocks’ market caps match CMA’s market cap.

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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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on CMA as the stock returned 16.2% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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