Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about American Express Company (NYSE:AXP) in this article.
Is American Express Company (NYSE:AXP) an outstanding stock to buy now? Investors who are in the know are taking a pessimistic view. The number of long hedge fund bets were trimmed by 5 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Diageo plc (ADR) (NYSE:DEO), Honeywell International Inc. (NYSE:HON), and American International Group Inc (NYSE:AIG) to gather more data points.
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Now, let’s take a gander at the new action encompassing American Express Company (NYSE:AXP).
What does the smart money think about American Express Company (NYSE:AXP)?
At Q3’s end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the biggest position in American Express Company (NYSE:AXP), worth close to $11.2389 billion, accounting for 8.8% of its total 13F portfolio. The second largest stake is held by Fisher Asset Management, managed by Ken Fisher, which holds a $858.5 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions comprise Jeffrey Ubben’s ValueAct Capital, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Because American Express Company (NYSE:AXP) has experienced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their positions entirely in the third quarter. Intriguingly, James Crichton’s Hitchwood Capital Management sold off the largest investment of all the hedgies watched by Insider Monkey, valued at about $69.9 million in call options. Gilchrist Berg’s fund, Water Street Capital, also said goodbye to its call options, about $23.3 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as American Express Company (NYSE:AXP) but similarly valued. These stocks are Diageo plc (ADR) (NYSE:DEO), Honeywell International Inc. (NYSE:HON), American International Group Inc (NYSE:AIG), and Toronto-Dominion Bank (USA) (NYSE:TD). All of these stocks’ market caps are closest to AXP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DEO | 25 | 1148398 | -1 |
| HON | 46 | 1294250 | -3 |
| AIG | 94 | 8425524 | -5 |
| TD | 16 | 342207 | -3 |
As you can see these stocks had an average of 45.25 hedge funds with bullish positions and the average amount invested in these stocks was $2,803 million. That figure was $16,120 million in AXP’s case. American International Group Inc (NYSE:AIG) is the most popular stock in this table. On the other hand Toronto-Dominion Bank (USA) (NYSE:TD) is the least popular one with only 16 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AIG might be a better candidate to consider a long position.
