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In the face of another possible dip in the stock market, investors can choose to seek out the evasive silver lining. For this article, we wanted to backtest banking stocks that outperformed the S&P 500 during the most recent financial crisis (Aug 2007 through Mar 2009).

These companies excelled relative to their peers during the last big downturn. That would place them high on the list of companies that might outperform the market again in a future downturn.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.


Out of a universe of 50 banking stocks that outperformed the market during the financial crisis, we found the stocks that smart money is buying up the most. Do you think these stocks could weather an upcoming storm in the market?

Use this list as a starting-off point for your own analysis. List sorted by net shares sold by institutional investors as a percentage of the share float.

1. Capitol Federal Financial, Inc. (NASDAQ:CFFN): Savings & Loans Industry. Market cap of $2018.25M. On 10/01/07 the closing price was at $34.62, compared to the closing price on 03/01/09 of $37.03. This implies a price return of 6.96% (the alpha vs. S&P 500 during the downturn at 59.45%). In the current quarter institutions have purchased 68.6M shares, or 43.65% of the 157.15M share float.

2. Hancock Holding Co. (NASDAQ:HBHC): Regional Banks Industry. Market cap of $1390.31M. On 10/01/07 the closing price was at $41.45, compared to the closing price on 03/01/09 of $28.36. This implies a price return of -31.58% (the alpha vs. S&P 500 during the downturn at 20.9%). In the current quarter institutions have purchased 12.3M shares, or 30.24% of the 40.68M share float.

3. Health Care REIT Inc. (NYSE:HCN): REIT. Market cap of $9442.52M. On 10/01/07 the closing price was at $44.64, compared to the closing price on 03/01/09 of $30.77. This implies a price return of -31.07% (the alpha vs. S&P 500 during the downturn at 21.41%). In the current quarter institutions have purchased 30.3M shares, or 17.24% of the 175.74M share float.

4. MFA Financial, Inc. (NYSE:MFA): REIT. Market cap of $2827.12M. On 10/01/07 the closing price was at $8.19, compared to the closing price on 03/01/09 of $5.74. This implies a price return of -29.91% (the alpha vs. S&P 500 during the downturn at 22.57%). In the current quarter institutions have purchased 60.2M shares, or 17.01% of the 353.84M share float.

5. First Niagara Financial Group Inc. (NASDAQ:FNFG): Savings & Loans Industry. Market cap of $2843.76M. On 10/01/07 the closing price was at $14.48, compared to the closing price on 03/01/09 of $11.62. This implies a price return of -19.75% (the alpha vs. S&P 500 during the downturn at 32.73%). In the current quarter institutions have purchased 24.4M shares, or 12.05% of the 202.41M share float.

6. Annaly Capital Management, Inc. (NYSE:NLY): REIT. Market cap of $15045.31M. On 10/01/07 the closing price was at $16.06, compared to the closing price on 03/01/09 of $13.9. This implies a price return of -13.45% (the alpha vs. S&P 500 during the downturn at 39.03%). In the current quarter institutions have purchased 67.6M shares, or 8.36% of the 808.74M share float.

7. TD AMERITRADE Holding Corporation (NYSE:AMTD): Investment Brokerage Industry. Market cap of $10861.55M. On 10/01/07 the closing price was at $18.48, compared to the closing price on 03/01/09 of $11.87. This implies a price return of -35.77% (the alpha vs. S&P 500 during the downturn at 16.72%). In the current quarter institutions have purchased 16.4M shares, or 6.93% of the 236.56M share float.

8. Glacier Bancorp Inc. (NASDAQ:GBCI): Regional Banks Industry. Market cap of $973.8M. On 10/01/07 the closing price was at $23.3, compared to the closing price on 03/01/09 of $15.39. This implies a price return of -33.95% (the alpha vs. S&P 500 during the downturn at 18.54%). In the current quarter institutions have purchased 3.7M shares, or 5.3% of the 69.79M share float.

9. Capstead Mortgage Corp. (NYSE:CMO):
Mortgage Investment Industry. Market cap of $1073.76M. On 10/01/07 the closing price was at $10.4, compared to the closing price on 03/01/09 of $10.02. This implies a price return of -3.65% (the alpha vs. S&P 500 during the downturn at 48.83%). In the current quarter institutions have purchased 3.3M shares, or 4.33% of the 76.20M share float.

10. W.R. Berkley Corporation (NYSE:WRB): Property & Casualty Insurance Industry. Market cap of $4553.73M. On 10/01/07 the closing price was at $29.95, compared to the closing price on 03/01/09 of $20.81. This implies a price return of -30.52% (the alpha vs. S&P 500 during the downturn at 21.97%). In the current quarter institutions have purchased 3.2M shares, or 2.79% of the 114.61M share float.

11. Oritani Financial Corp. (NASDAQ:ORIT): Regional Banks Industry. Market cap of $713.74M. On 10/01/07 the closing price was at $16.03, compared to the closing price on 03/01/09 of $10.81. This implies a price return of -32.56% (the alpha vs. S&P 500 during the downturn at 19.92%). In the current quarter institutions have purchased 999.6K shares, or 1.83% of the 54.62M share float.

12. Catalyst Health Solutions, Inc. (NASDAQ:CHSI): Insurance Brokers Industry. Market cap of $2443.1M. On 10/01/07 the closing price was at $28.6, compared to the closing price on 03/01/09 of $21.08. This implies a price return of -26.29% (the alpha vs. S&P 500 during the downturn at 26.19%). In the current quarter institutions have purchased 651.9K shares, or 1.52% of the 42.84M share float.

*Institutional data sourced from Fidelity. All other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 12 Banking Stocks That Outperformed S&P 500 During Downturn Now Being Bought by Institutions