Is American Express Company (NYSE:AXP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
American Express Company (NYSE:AXP) has experienced a decrease in enthusiasm from smart money recently. American Express Company (NYSE:AXP) was in 48 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 58. Our calculations also showed that AXP isn't among the 30 most popular stocks among hedge funds (click for Q3 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 21st century investor’s toolkit there are a large number of metrics stock traders put to use to appraise publicly traded companies. A pair of the most useful metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can trounce the market by a very impressive margin (see the details here).
Warren Buffett of Berkshire Hathaway
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Keeping this in mind we're going to take a glance at the new hedge fund action surrounding American Express Company (NYSE:AXP).
Do Hedge Funds Think AXP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. By comparison, 55 hedge funds held shares or bullish call options in AXP a year ago. So, let's check out 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, Berkshire Hathaway, managed by Warren Buffett, holds the largest position in American Express Company (NYSE:AXP). Berkshire Hathaway has a $15.199 billion position in the stock, comprising 6.6% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, managed by Ken Fisher, which holds a $1.4641 billion position; 1.3% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish contain Andreas Halvorsen's Viking Global, Eashwar Krishnan's Tybourne Capital Management and Mario Gabelli's GAMCO Investors. In terms of the portfolio weights assigned to each position Aquamarine Capital Management allocated the biggest weight to American Express Company (NYSE:AXP), around 13.89% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, setting aside 8.47 percent of its 13F equity portfolio to AXP.
Since American Express Company (NYSE:AXP) has faced a decline in interest from the smart money, it's easy to see that there is a sect of funds who sold off their full holdings by the end of the third quarter. It's worth mentioning that Matthew Hulsizer's PEAK6 Capital Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $15 million in stock. Frank Brosens's fund, Taconic Capital, also cut its stock, about $8.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 6 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as American Express Company (NYSE:AXP) but similarly valued. We will take a look at Diageo plc (NYSE:DEO), HSBC Holdings plc (NYSE:HSBC), Gilead Sciences, Inc. (NASDAQ:GILD), The Estee Lauder Companies Inc (NYSE:EL), Target Corporation (NYSE:TGT), Zoetis Inc (NYSE:ZTS), and Stryker Corporation (NYSE:SYK). This group of stocks' market caps resemble AXP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DEO,19,466316,-1 HSBC,10,276252,0 GILD,61,1989449,-7 EL,46,1518782,0 TGT,57,3952738,3 ZTS,58,2248300,0 SYK,48,1718729,-2 Average,42.7,1738652,-1 [/table]
As you can see these stocks had an average of 42.7 hedge funds with bullish positions and the average amount invested in these stocks was $1739 million. That figure was $18578 million in AXP's case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 10 bullish hedge fund positions. American Express Company (NYSE:AXP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AXP is 61.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on AXP as the stock returned 23.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
