In this article we will analyze whether M&T Bank Corporation (NYSE:MTB) 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 by double digits annually.
M&T Bank Corporation (NYSE:MTB) was in 46 hedge funds’ portfolios at the end of June. The all time high for this statistic is 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. MTB shareholders have witnessed an increase in hedge fund interest recently. There were 36 hedge funds in our database with MTB holdings at the end of March. Our calculations also showed that MTB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s check out the latest hedge fund action surrounding M&T Bank Corporation (NYSE:MTB).
Do Hedge Funds Think MTB Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of 28% from the first quarter of 2020. By comparison, 30 hedge funds held shares or bullish call options in MTB a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of M&T Bank Corporation (NYSE:MTB), with a stake worth $91.2 million reported as of the end of June. Trailing Adage Capital Management was Citadel Investment Group, which amassed a stake valued at $88.6 million. Millennium Management, AQR Capital Management, and Polaris Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position BlueMar Capital Management allocated the biggest weight to M&T Bank Corporation (NYSE:MTB), around 1.69% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 1.26 percent of its 13F equity portfolio to MTB.
As one would reasonably expect, key hedge funds have been driving this bullishness. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the largest position in M&T Bank Corporation (NYSE:MTB). LMR Partners had $19.3 million invested in the company at the end of the quarter. Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management also initiated a $6.4 million position during the quarter. The other funds with brand new MTB positions are Daniel Johnson’s Gillson Capital, Andrew Weiss’s Weiss Asset Management, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as M&T Bank Corporation (NYSE:MTB) but similarly valued. These stocks are Charles River Laboratories International Inc. (NYSE:CRL), Warner Music Group Corp. (NASDAQ:WMG), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Incyte Corporation (NASDAQ:INCY), Ally Financial Inc (NYSE:ALLY), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), and Tyler Technologies, Inc. (NYSE:TYL). This group of stocks’ market values are closest to MTB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRL | 44 | 1217955 | 2 |
| WMG | 29 | 793609 | 2 |
| SHG | 5 | 31985 | -1 |
| INCY | 34 | 3644056 | 2 |
| ALLY | 54 | 2432402 | 3 |
| SSNC | 49 | 2568906 | -5 |
| TYL | 33 | 731035 | 5 |
| Average | 35.4 | 1631421 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $1631 million. That figure was $539 million in MTB’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. M&T Bank Corporation (NYSE:MTB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTB is 81.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on MTB as the stock returned 6% since the end of Q2 (through 10/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow M&T Bank Corp (NYSE:MTB)
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Disclosure: None. This article was originally published at Insider Monkey.
