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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of U.S. Bancorp (NYSE:USB) based on that data.
U.S. Bancorp (NYSE:USB) shareholders have witnessed a decrease in hedge fund sentiment of late. U.S. Bancorp (NYSE:USB) was in 43 hedge funds' portfolios at the end of March. The all time high for this statistic is 60. There were 60 hedge funds in our database with USB holdings at the end of December. Our calculations also showed that USB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Donald Yacktman of Yacktman Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. Keeping this in mind let's analyze the recent hedge fund action encompassing U.S. Bancorp (NYSE:USB).
Do Hedge Funds Think USB Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from one quarter earlier. On the other hand, there were a total of 51 hedge funds with a bullish position in USB a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in U.S. Bancorp (NYSE:USB), which was worth $7173 million at the end of the fourth quarter. On the second spot was Yacktman Asset Management which amassed $262 million worth of shares. AQR Capital Management, Citadel Investment Group, and Adage Capital Management 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 U.S. Bancorp (NYSE:USB), around 5.45% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, setting aside 4.38 percent of its 13F equity portfolio to USB.
Judging by the fact that U.S. Bancorp (NYSE:USB) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few money managers that decided to sell off their full holdings heading into Q2. Interestingly, Daniel Sundheim's D1 Capital Partners dumped the largest position of the 750 funds watched by Insider Monkey, worth an estimated $786.9 million in stock, and Clint Carlson's Carlson Capital was right behind this move, as the fund sold off about $30.6 million worth. These transactions are interesting, as total hedge fund interest fell by 17 funds heading into Q2.
Let's now take a look at hedge fund activity in other stocks similar to U.S. Bancorp (NYSE:USB). These stocks are General Motors Company (NYSE:GM), Mondelez International Inc (NASDAQ:MDLZ), BP plc (NYSE:BP), Canadian National Railway Company (NYSE:CNI), Gilead Sciences, Inc. (NASDAQ:GILD), Automatic Data Processing (NASDAQ:ADP), and Fiserv, Inc. (NASDAQ:FISV). This group of stocks' market values are closest to USB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GM,86,8053011,16 MDLZ,45,2845001,-5 BP,29,1243778,0 CNI,36,4705189,5 GILD,65,2689659,-7 ADP,42,2924374,-6 FISV,75,2748118,-19 Average,54,3601304,-2.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 54 hedge funds with bullish positions and the average amount invested in these stocks was $3601 million. That figure was $8335 million in USB's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. U.S. Bancorp (NYSE:USB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for USB is 21.8. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately USB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); USB investors were disappointed as the stock returned -1% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.