The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought The Bank of New York Mellon Corporation (NYSE:BK) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
The Bank of New York Mellon Corporation (NYSE:BK) investors should pay attention to a decrease in support from the world's most elite money managers recently. The Bank of New York Mellon Corporation (NYSE:BK) was in 48 hedge funds' portfolios at the end of June. The all time high for this statistics is 53. Our calculations also showed that BK isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
At the moment there are numerous metrics investors use to appraise their stock investments. Some of the best metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outperform the broader indices by a healthy amount (see the details here).
AQR CAPITAL MANAGEMENT
Cliff Asness of AQR Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let's take a glance at the latest hedge fund action regarding The Bank of New York Mellon Corporation (NYSE:BK).
Hedge fund activity in The Bank of New York Mellon Corporation (NYSE:BK)
Heading into the third quarter of 2020, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in BK a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Is BK A Good Stock To Buy?
Among these funds, Berkshire Hathaway held the most valuable stake in The Bank of New York Mellon Corporation (NYSE:BK), which was worth $2796.6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $218 million worth of shares. GLG Partners, AQR Capital Management, and Trian Partners 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 LFL Advisers allocated the biggest weight to The Bank of New York Mellon Corporation (NYSE:BK), around 8.65% of its 13F portfolio. Trian Partners is also relatively very bullish on the stock, setting aside 3.51 percent of its 13F equity portfolio to BK.
Seeing as The Bank of New York Mellon Corporation (NYSE:BK) has faced bearish sentiment from the smart money, it's easy to see that there was a specific group of money managers that decided to sell off their entire stakes in the second quarter. At the top of the heap, James Parsons's Junto Capital Management said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, valued at close to $41.2 million in stock, and Anand Parekh's Alyeska Investment Group was right behind this move, as the fund cut about $33 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds in the second quarter.
Let's go over hedge fund activity in other stocks similar to The Bank of New York Mellon Corporation (NYSE:BK). We will take a look at Bank of Montreal (NYSE:BMO), Constellation Brands, Inc. (NYSE:STZ), Thomson Reuters Corporation (NYSE:TRI), Banco Bradesco SA (NYSE:BBD), Public Storage (NYSE:PSA), SBA Communications Corporation (NASDAQ:SBAC), and Metlife Inc (NYSE:MET). This group of stocks' market valuations resemble BK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMO,13,107019,0 STZ,53,1653433,3 TRI,25,440519,3 BBD,18,235952,3 PSA,26,712541,-1 SBAC,57,2165651,11 MET,31,970822,-3 Average,31.9,897991,2.3 [/table]
As you can see these stocks had an average of 31.9 hedge funds with bullish positions and the average amount invested in these stocks was $898 million. That figure was $4431 million in BK's case. SBA Communications Corporation (NASDAQ:SBAC) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 13 bullish hedge fund positions. The Bank of New York Mellon Corporation (NYSE:BK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BK is 67.9. 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 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately BK wasn't nearly as popular as these 10 stocks and hedge funds that were betting on BK were disappointed as the stock returned -3.5% 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.
