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Should You Buy U.S. Bancorp (USB)?

Reymerlyn Martin

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about U.S. Bancorp (NYSE:USB)?

U.S. Bancorp (NYSE:USB) was in 51 hedge funds' portfolios at the end of March. USB shareholders have witnessed an increase in activity from the world's largest hedge funds in recent months. There were 50 hedge funds in our database with USB positions at the end of the previous quarter. Our calculations also showed that USB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are over 8000 funds trading today, We hone in on the aristocrats of this group, about 850 funds. These investment experts handle the lion's share of the smart money's total asset base, and by watching their unrivaled stock picks, Insider Monkey has figured out various investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_255014" align="aligncenter" width="400"] Clint Carlson of Carlson Capital[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the key hedge fund action encompassing U.S. Bancorp (NYSE:USB).

Hedge fund activity in U.S. Bancorp (NYSE:USB)

Heading into the second quarter of 2020, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards USB over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Berkshire Hathaway held the most valuable stake in U.S. Bancorp (NYSE:USB), which was worth $4563.2 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $216.8 million worth of shares. Yacktman Asset Management, D E Shaw, and Arrowstreet Capital 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 Steel Canyon Capital allocated the biggest weight to U.S. Bancorp (NYSE:USB), around 5.59% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, designating 4.63 percent of its 13F equity portfolio to USB.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. D1 Capital Partners, managed by Daniel Sundheim, created the most outsized position in U.S. Bancorp (NYSE:USB). D1 Capital Partners had $68.9 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $27.3 million position during the quarter. The other funds with brand new USB positions are Daniel Johnson's Gillson Capital, Renaissance Technologies, and Benjamin A. Smith's Laurion Capital Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as U.S. Bancorp (NYSE:USB) but similarly valued. These stocks are Morgan Stanley (NYSE:MS), Northrop Grumman Corporation (NYSE:NOC), VMware, Inc. (NYSE:VMW), and Chubb Limited (NYSE:CB). This group of stocks' market values match USB's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MS,70,3116102,10 NOC,45,984213,1 VMW,27,420625,-6 CB,33,691382,9 Average,43.75,1303081,3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.75 hedge funds with bullish positions and the average amount invested in these stocks was $1303 million. That figure was $5626 million in USB's case. Morgan Stanley (NYSE:MS) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 27 bullish hedge fund positions. U.S. Bancorp (NYSE:USB) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but beat the market by 15.6 percentage points. Unfortunately USB wasn't nearly as popular as these 10 stocks and hedge funds that were betting on USB were disappointed as the stock returned -4.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.

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