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Is STT Stock A Buy or Sell?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on State Street Corporation (NYSE:STT).

Is STT stock a buy? State Street Corporation (NYSE:STT) has seen a decrease in enthusiasm from smart money of late. State Street Corporation (NYSE:STT) was in 31 hedge funds' portfolios at the end of December. The all time high for this statistic is 45. Our calculations also showed that STT isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At the moment there are a multitude of formulas stock market investors use to assess their holdings. A duo of the most useful formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the top money managers can trounce their index-focused peers by a solid amount (see the details here).

Donald Yacktman of Yacktman Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's check out the key hedge fund action regarding State Street Corporation (NYSE:STT).

Do Hedge Funds Think STT Is A Good Stock To Buy Now?

At fourth quarter's end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 45 hedge funds with a bullish position in STT a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Donald Yacktman's Yacktman Asset Management has the most valuable position in State Street Corporation (NYSE:STT), worth close to $255.8 million, accounting for 3.2% of its total 13F portfolio. The second most bullish fund manager is GAMCO Investors, led by Mario Gabelli, holding a $70.6 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Cliff Asness's AQR Capital Management, Phill Gross and Robert Atchinson's Adage Capital Management and John Hempton's Bronte Capital. In terms of the portfolio weights assigned to each position Yacktman Asset Management allocated the biggest weight to State Street Corporation (NYSE:STT), around 3.16% of its 13F portfolio. Bronte Capital is also relatively very bullish on the stock, setting aside 3.03 percent of its 13F equity portfolio to STT.

Because State Street Corporation (NYSE:STT) has witnessed falling interest from the smart money, it's safe to say that there exists a select few money managers who sold off their positions entirely by the end of the fourth quarter. At the top of the heap, Stuart J. Zimmer's Zimmer Partners cut the largest position of the "upper crust" of funds monitored by Insider Monkey, comprising close to $8.9 million in stock. Daniel Johnson's fund, Gillson Capital, also sold off its stock, about $5.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds by the end of the fourth quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as State Street Corporation (NYSE:STT) but similarly valued. These stocks are Delta Air Lines, Inc. (NYSE:DAL), Suncor Energy Inc. (NYSE:SU), TELUS Corporation (NYSE:TU), McCormick & Company, Incorporated (NYSE:MKC), The Clorox Company (NYSE:CLX), Dollar Tree, Inc. (NASDAQ:DLTR), and Skyworks Solutions Inc (NASDAQ:SWKS). This group of stocks' market caps resemble STT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DAL,58,1058704,15 SU,25,686120,3 TU,14,183122,2 MKC,36,1880232,-1 CLX,39,1653099,0 DLTR,53,1977339,3 SWKS,41,763595,-9 Average,38,1171744,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1172 million. That figure was $503 million in STT's case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 14 bullish hedge fund positions. State Street Corporation (NYSE:STT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for STT is 42. 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 gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on STT as the stock returned 20.2% since the end of the fourth quarter (through 4/12) and outperformed the market by an even larger margin.

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

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