We started seeing tectonic shifts in the market during the third quarter. Small-cap stocks underperformed the large-cap stocks by more than 10 percentage points between the end of June 2015 and the end of June 2016. A mean reversion in trends bumped small-cap stocks’ return to almost 9% in Q3, outperforming their large-cap peers by 5 percentage points. The momentum in small-cap space hasn’t subsided during this quarter either. Small-cap stocks beat large-cap stocks by another 5 percentage points during the first 7 weeks of this quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were boosting their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards BB&T Corporation (NYSE:BBT).
BB&T Corporation (NYSE:BBT) investors should be aware of an increase in hedge fund interest lately. BBT was in 22 hedge funds’ portfolios at the end of the third quarter of 2016. There were 20 hedge funds in our database with BBT holdings at the end of the previous quarter. At the end of this article we will also compare BBT to other stocks including PPG Industries, Inc. (NYSE:PPG), Liberty Global Inc. (NASDAQ:LBTYA), and Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) to get a better sense of its popularity.
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Hedge fund activity in BB&T Corporation (NYSE:BBT)
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 10% from one quarter earlier, as smart money ownership fails to rebound to Q3 2015 levels. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in BB&T Corporation (NYSE:BBT), worth close to $59.5 million. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $33.1 million position. Remaining professional money managers with similar optimism contain Richard S. Pzena’s Pzena Investment Management and Matthew Hulsizer’s PEAK6 Capital Management.
As one would reasonably expect, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the biggest call position in BB&T Corporation (NYSE:BBT). Citadel Investment Group had $11.9 million invested in the company at the end of the quarter. Paul Tudor Jones’ Tudor Investment Corp also made a $7.6 million investment in the stock during the quarter. The other funds with brand new BBT positions are George Hall’s Clinton Group, Matthew Tewksbury’s Stevens Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s check out hedge fund activity in other stocks similar to BB&T Corporation (NYSE:BBT). We will take a look at PPG Industries, Inc. (NYSE:PPG), Liberty Global Inc. (NASDAQ:LBTYA), Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), and Eaton Corporation, PLC Ordinary Shares (NYSE:ETN). This group of stocks’ market valuations resemble BBT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PPG | 34 | 725616 | -3 |
| LBTYA | 52 | 2089982 | 1 |
| RBS | 10 | 20902 | 1 |
| ETN | 38 | 668498 | 5 |
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $876 million. That figure was $181 million in BBT’s case. Liberty Global Inc. (NASDAQ:LBTYA) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) is the least popular one with only 10 bullish hedge fund positions. BB&T Corporation (NYSE:BBT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are pouring money into. In this regard LBTYA might be a better candidate to consider taking a long position in.
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