Were Hedge Funds Right About BOK Financial Corporation (BOKF)?

In this article we will analyze whether BOK Financial Corporation (NASDAQ:BOKF) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

BOK Financial Corporation (NASDAQ:BOKF) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 26. BOKF investors should pay attention to a decrease in enthusiasm from smart money recently. There were 26 hedge funds in our database with BOKF positions at the end of the fourth quarter. Our calculations also showed that BOKF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

John Rogers of Ariel Investments

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s analyze the recent hedge fund action surrounding BOK Financial Corporation (NASDAQ:BOKF).

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

Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -35% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BOKF over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Ariel Investments held the most valuable stake in BOK Financial Corporation (NASDAQ:BOKF), which was worth $267 million at the end of the fourth quarter. On the second spot was Diamond Hill Capital which amassed $104.4 million worth of shares. Royce & Associates, AQR Capital Management, and D E Shaw 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 Ariel Investments allocated the biggest weight to BOK Financial Corporation (NASDAQ:BOKF), around 2.63% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, dishing out 0.42 percent of its 13F equity portfolio to BOKF.

Since BOK Financial Corporation (NASDAQ:BOKF) has faced falling interest from the aggregate hedge fund industry, we can see that there was a specific group of fund managers that slashed their full holdings last quarter. At the top of the heap, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling about $8.9 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $3.3 million worth. These moves are interesting, as total hedge fund interest was cut by 9 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BOK Financial Corporation (NASDAQ:BOKF) but similarly valued. We will take a look at Ovintiv Inc. (NYSE:OVV), Coherent, Inc. (NASDAQ:COHR), Stericycle Inc (NASDAQ:SRCL), The Timken Company (NYSE:TKR), nCino, Inc. (NASDAQ:NCNO), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), and Globus Medical Inc (NYSE:GMED). This group of stocks’ market valuations match BOKF’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $505 million. That figure was $455 million in BOKF’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is the least popular one with only 14 bullish hedge fund positions. BOK Financial Corporation (NASDAQ:BOKF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BOKF is 21.2. 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately BOKF wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BOKF investors were disappointed as the stock returned -7.8% since the end of March (through 7/23) 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.