Hedge Funds Are Dumping The Bank of New York Mellon Corporation (BK)

Is The Bank of New York Mellon Corporation (NYSE:BK) a bargain? The best stock pickers are in a bearish mood. The number of long hedge fund bets retreated by 3 recently.

If you’d ask most investors, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are greater than 8000 funds in operation today, we hone in on the moguls of this group, around 450 funds. It is estimated that this group has its hands on most of the smart money’s total capital, and by paying attention to their top stock picks, we have formulated a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as beneficial, optimistic insider trading sentiment is another way to parse down the investments you’re interested in. There are a number of stimuli for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).

Keeping this in mind, we’re going to take a gander at the latest action surrounding The Bank of New York Mellon Corporation (NYSE:BK).

What does the smart money think about The Bank of New York Mellon Corporation (NYSE:BK)?

In preparation for this quarter, a total of 34 of the hedge funds we track held long positions in this stock, a change of -8% from the first quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Mason Hawkins’s Southeastern Asset Management had the most valuable position in The Bank of New York Mellon Corporation (NYSE:BK), worth close to $1.2297 billion, comprising 5.5% of its total 13F portfolio. Sitting at the No. 2 spot is Jean-Marie Eveillard of First Eagle Investment Management, with a $684.4 million position; 2.3% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Warren Buffett’s Berkshire Hathaway, Martin Whitman’s Third Avenue Management and Donald Yacktman’s Yacktman Asset Management.

Seeing as The Bank of New York Mellon Corporation (NYSE:BK) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that elected to cut their entire stakes heading into Q2. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest investment of the “upper crust” of funds we watch, totaling about $120.7 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund cut about $48.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds heading into Q2.

What do corporate executives and insiders think about The Bank of New York Mellon Corporation (NYSE:BK)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest six-month time frame, The Bank of New York Mellon Corporation (NYSE:BK) has experienced zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to The Bank of New York Mellon Corporation (NYSE:BK). These stocks are T. Rowe Price Group, Inc. (NASDAQ:TROW), The Blackstone Group L.P. (NYSE:BX), BlackRock, Inc. (NYSE:BLK), State Street Corporation (NYSE:STT), and Franklin Resources, Inc. (NYSE:BEN). This group of stocks belong to the asset management industry and their market caps match BK’s market cap.

With the results exhibited by the aforementioned studies, everyday investors should always monitor hedge fund and insider trading activity, and The Bank of New York Mellon Corporation (NYSE:BK) shareholders fit into this picture quite nicely.

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