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In this article you are going to find out whether hedge funds think The Bank of New York Mellon Corporation (NYSE:BK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is BK stock a buy or sell? The Bank of New York Mellon Corporation (NYSE:BK) was in 47 hedge funds' portfolios at the end of December. The all time high for this statistic is 58. BK has seen a decrease in activity from the world's largest hedge funds recently. There were 48 hedge funds in our database with BK positions at the end of the third quarter. Our calculations also showed that BK isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Ray Dalio of Bridgewater Associates
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Do Hedge Funds Think BK Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in BK over the last 22 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Berkshire Hathaway was the largest shareholder of The Bank of New York Mellon Corporation (NYSE:BK), with a stake worth $3070.8 million reported as of the end of December. Trailing Berkshire Hathaway was D E Shaw, which amassed a stake valued at $194 million. Millennium Management, Yacktman Asset Management, and GLG Partners 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 Prana Capital Management allocated the biggest weight to The Bank of New York Mellon Corporation (NYSE:BK), around 11.31% of its 13F portfolio. LFL Advisers is also relatively very bullish on the stock, dishing out 7.95 percent of its 13F equity portfolio to BK.
Because The Bank of New York Mellon Corporation (NYSE:BK) has experienced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who were dropping their full holdings heading into Q1. Interestingly, John Petry's Sessa Capital dropped the biggest position of all the hedgies monitored by Insider Monkey, totaling about $24.9 million in stock, and Jonathan Barrett and Paul Segal's Luminus Management was right behind this move, as the fund sold off about $8.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q1.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as The Bank of New York Mellon Corporation (NYSE:BK) but similarly valued. We will take a look at Microchip Technology Incorporated (NASDAQ:MCHP), Cintas Corporation (NASDAQ:CTAS), Chewy, Inc. (NYSE:CHWY), MSCI Inc (NYSE:MSCI), Brown-Forman Corporation (NYSE:BF), ING Groep N.V. (NYSE:ING), and Sempra Energy (NYSE:SRE). This group of stocks' market values resemble BK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MCHP,45,961474,10 CTAS,36,746276,-2 CHWY,38,728528,-8 MSCI,41,984592,-6 BF,29,1575074,-3 ING,9,397074,0 SRE,33,778325,1 Average,33,881620,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $882 million. That figure was $4690 million in BK's case. Microchip Technology Incorporated (NASDAQ:MCHP) is the most popular stock in this table. On the other hand ING Groep N.V. (NYSE:ING) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks The Bank of New York Mellon Corporation (NYSE:BK) is more popular among hedge funds. Our overall hedge fund sentiment score for BK is 78.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on BK as the stock returned 10.1% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.