We can judge whether BB&T Corporation (NYSE:BBT) 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 when we factor in known risk factors.
BB&T Corporation (NYSE:BBT) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. BBT was in 23 hedge funds' portfolios at the end of June. There were 30 hedge funds in our database with BBT positions at the end of the previous quarter. Our calculations also showed that BBT isn't among the 30 most popular stocks among hedge funds (see the video at the end of this article).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the fresh hedge fund action encompassing BB&T Corporation (NYSE:BBT).
Hedge fund activity in BB&T Corporation (NYSE:BBT)
At Q2's end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in BBT a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of BB&T Corporation (NYSE:BBT), with a stake worth $92.1 million reported as of the end of March. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $65.6 million. Two Sigma Advisors, Citadel Investment Group, and Gillson Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that BB&T Corporation (NYSE:BBT) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there was a specific group of hedgies that decided to sell off their full holdings by the end of the second quarter. Intriguingly, Matthew Hulsizer's PEAK6 Capital Management dumped the biggest investment of the 750 funds followed by Insider Monkey, totaling an estimated $9.8 million in stock, and Matthew Tewksbury's Stevens Capital Management was right behind this move, as the fund dropped about $8.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 7 funds by the end of the second quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as BB&T Corporation (NYSE:BBT) but similarly valued. We will take a look at Autodesk, Inc. (NASDAQ:ADSK), The Kraft Heinz Company (NASDAQ:KHC), Ecopetrol S.A. (NYSE:EC), and Energy Transfer L.P. (NYSE:ET). This group of stocks' market values are similar to BBT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADSK,56,3385274,-1 KHC,34,10579951,5 EC,10,189695,-5 ET,29,763141,1 Average,32.25,3729515,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $3730 million. That figure was $352 million in BBT's case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 10 bullish hedge fund positions. BB&T Corporation (NYSE:BBT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on BBT as the stock returned 9.7% during the same time frame and outperformed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.