4. The Bank of New York Mellon Corporation (NYSE:BK)
Berkshire Hathaway’s Stake Value: $4.2 billion
Percentage of Berkshire Hathaway’s 13F Portfolio: 1.26%
Number of Hedge Fund Holders: 49
The Bank of New York Mellon Corporation (NYSE:BK) is one of the oldest banks in the world as it was set up in 1784 in New York, New York, United States. It offers a host of services to its clients, such as exchange traded funds, accounts, foreign exchange, securities lending, investment, wealth, and retirement management solutions alongside receivables processing and payables management.
For its fiscal fourth quarter, The Bank of New York Mellon Corporation (NYSE:BK) reported $4 billion in revenue and $1.04 in non-GAAP EPS, beating analyst estimates for both. Morgan Stanley upgraded its share rating to Equal Weight from Underweight in March 2022, but reduced the share price target to $58 from $65, outlining that while the Ukraine war will negatively affect banks, The Bank of New York Mellon Corporation (NYSE:BK) is slated to benefit from interest rate hikes.
Mr. Buffett’s investment firm owned 72 million The Bank of New York Mellon Corporation (NYSE:BK) shares by the close of last year’s fourth quarter, in a $4.2 billion stake that represented 1.26% of its investment portfolio. Insider Monkey’s research of 924 hedge funds for the same time period revealed that 49 had owned a stake in the bank.
Jean-Marie Eveillard’s First Eagle Investment Management is The Bank of New York Mellon Corporation (NYSE:BK)’s largest investor after Berkshire Hathaway. It has a $928 million stake through owning 15.9 million shares.
Ariel Investments mentioned the bank in its Q4 2021 investor letter. Here is what the firm said:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
