Money Managers Add to Bank Holdings Amid Stock Market Dive

Investor concerns about a potential economic recession led to steep losses in the stock market last year, and bank stocks in particular were hit hard. Even so, several money managers increased their holdings in banking companies during the fourth quarter and added new investments in other banks.

The KBW Nasdaq Bank Index fell 1.3% in 2015, reflecting investor jitters about falling oil prices and low interest rates. In the fourth quarter, though, the index rose 5.3%. The largest banks have been especially hurt lately, with Bank of America, Citigroup and JPMorgan Chase all hitting 52-week lows in recent weeks.

Nonetheless, some institutional investors added to their bank holdings during the fourth quarter.

Stieven Capital Advisors in St. Louis, which invests primarily in bank stocks, bought new stakes in six banking companies in the quarter, including the $6.2 billion-asset Opus Bank in Irvine, Calif. Stieven also added a new position in the $961 million-asset Centrue Financial in Ottawa, Ill., buying about 630,000 shares, giving it a 9.7% stake in Centrue.

However, Stieven reduced its stake in the $12 billion-asset TFS Financial in Cleveland, its largest holding, selling about 351,000 shares. Additionally, Stieven sold about 107,000 shares of the $142 billion-asset Fifth Third Bancorp in Cincinnati; and it sold about 6,200 shares of the $26 billion-asset FirstMerit in Akron, Ohio. FirstMerit announced in January that it was being sold to the $71 billion-asset Huntington Bancshares in Columbus, Ohio, for $3.4 billion.

Mendon Capital Advisors in Rochester, N.Y., which also invests mostly in banks, increased its largest holding, in the $4.5 billion-asset Yadkin Financial in Raleigh, N.C. It bought 278,000 shares, giving it a 4.2% stake in the company.

Mendon bought new stakes in 39 companies in the quarter, including Opus Bank and General Electric's credit card spinoff Synchrony Financial. Mendon also bought about 1 million shares of the $15 billion-asset Astoria Financial in Lake Success, N.Y., which announced in the fourth quarter that it had agreed to be sold to the $50 billion-asset New York Community Bancorp in Westbury for $2 billion.

Mendon withdrew its investment in the $8.2 billion-asset Banc of California in Irvine, selling all 504,000 shares.

Clover Partners, an activist investor in Dallas, increased its investment in the $3.4 billion-asset Financial Institutions in Warsaw, N.Y., its second-largest holding. Clover bought about 224,000 shares of the holding company for Five Star Bank, increasing its total investment to about 753,000 shares, or 5.3% of the company. Clover has been pushing Financial Institutions to find a buyer.

Clover dropped two bank investments in the quarter: in the $2.7 billion-asset First Connecticut Bancorp in Farmington and the $5.6 billion-asset Ameris Bancorp in Moultrie, Ga.

Basswood Capital Management in New York made significant additions to its largest holdings, increasing its stakes in the $126 billion-asset Regions Financial in Birmingham, Ala.; the $138 billion-asset Citizens Financial Group in Providence, R.I.; and the $21 billion-asset TCF Financial in Wayzata, Minn.

Basswood also ended its stakes in several regional banks during the quarter, including Huntington, First Connecticut and the $18 billion-asset Fulton Financial in Lancaster, Pa.

Warren Buffett's Berkshire Hathaway, already the biggest shareholder in Wells Fargo, bought about 9.4 million Wells shares in the fourth quarter. That increased Buffett's stake to about 9.4% of the San Francisco company.

Berkshire made no changes to its holdings of other financial services companies. After Wells Fargo, Berkshire's largest holding in the financial sector is a 15.4% stake in American Express.

Blue Harbour Group, an activist investor in Greenwich, Conn., bought 100,000 shares of the $21 billion-asset Investors Bancorp in Short Hills, N.J. That increased Blue Harbour's stake to 28.7 million shares, or about 8.5% of Investors, the largest holding in Blue Harbour's portfolio.