We can judge whether The Bank of New York Mellon Corporation (NYSE:BK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
The Bank of New York Mellon Corporation (NYSE:BK) was in 33 hedge funds’ portfolios at the end of the second quarter of 2019. BK shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 36 hedge funds in our database with BK positions at the end of the previous quarter. Our calculations also showed that BK isn’t among the 30 most popular stocks among hedge funds (see the video at the end of this article).
If you’d ask most stock holders, hedge funds are viewed as unimportant, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, We hone in on the crème de la crème of this group, approximately 750 funds. It is estimated that this group of investors administer the lion’s share of the hedge fund industry’s total asset base, and by tracking their inimitable picks, Insider Monkey has revealed many investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the fresh hedge fund action surrounding 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 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BK over the last 16 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Berkshire Hathaway was the largest shareholder of The Bank of New York Mellon Corporation (NYSE:BK), with a stake worth $3573.4 million reported as of the end of March. Trailing Berkshire Hathaway was Trian Partners, which amassed a stake valued at $557.2 million. Citadel Investment Group, GAMCO Investors, and Yacktman Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Since The Bank of New York Mellon Corporation (NYSE:BK) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there exists a select few hedge funds who sold off their full holdings last quarter. At the top of the heap, Benjamin A. Smith’s Laurion Capital Management dropped the largest stake of the 750 funds tracked by Insider Monkey, valued at close to $19.7 million in stock. David Harding’s fund, Winton Capital Management, also dumped its stock, about $15.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to The Bank of New York Mellon Corporation (NYSE:BK). We will take a look at Public Storage (NYSE:PSA), Analog Devices, Inc. (NASDAQ:ADI), AFLAC Incorporated (NYSE:AFL), and Keurig Dr Pepper Inc. (NYSE:KDP). This group of stocks’ market values are closest to BK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSA | 20 | 824189 | -5 |
| ADI | 44 | 2910043 | 4 |
| AFL | 23 | 727206 | -7 |
| KDP | 21 | 699540 | -1 |
| Average | 27 | 1290245 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1290 million. That figure was $4940 million in BK’s case. Analog Devices, Inc. (NASDAQ:ADI) is the most popular stock in this table. On the other hand Public Storage (NYSE:PSA) is the least popular one with only 20 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 calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BK, though not to the same extent, as the stock returned 3.1% during the third quarter and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
