Hedge Funds’ Top Banking Stock

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of JPMorgan Chase & Co. (NYSE:JPM) based on that data.

Is JPMorgan Chase & Co. (NYSE:JPM) a sound investment right now? The smart money was turning less bullish. The number of long hedge fund positions decreased by 6 in recent months. JPMorgan Chase & Co. (NYSE:JPM) was in 112 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 123. Our calculations also showed that JPM ranked #17 among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 118 hedge funds in our database with JPM holdings at the end of September.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Ricky Sandler of Eminence Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to take a look at the new hedge fund action regarding JPMorgan Chase & Co. (NYSE:JPM).

Do Hedge Funds Think JPM Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 112 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the third quarter of 2020. By comparison, 98 hedge funds held shares or bullish call options in JPM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the number one position in JPMorgan Chase & Co. (NYSE:JPM). Viking Global has a $1.0749 billion position in the stock, comprising 3% of its 13F portfolio. Coming in second is Daniel Sundheim of D1 Capital Partners, with a $1.013 billion position; the fund has 4.8% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Ken Fisher’s Fisher Asset Management, Tom Russo’s Gardner Russo & Gardner and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Global Frontier Investments allocated the biggest weight to JPMorgan Chase & Co. (NYSE:JPM), around 30.24% of its 13F portfolio. Adam Capital is also relatively very bullish on the stock, dishing out 20.73 percent of its 13F equity portfolio to JPM.

Because JPMorgan Chase & Co. (NYSE:JPM) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few money managers that elected to cut their full holdings last quarter. It’s worth mentioning that Ricky Sandler’s Eminence Capital said goodbye to the largest stake of all the hedgies followed by Insider Monkey, valued at about $143.8 million in stock, and Warren Buffett’s Berkshire Hathaway was right behind this move, as the fund sold off about $93.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to JPMorgan Chase & Co. (NYSE:JPM). We will take a look at Mastercard Incorporated (NYSE:MA), The Procter & Gamble Company (NYSE:PG), UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), NVIDIA Corporation (NASDAQ:NVDA), The Home Depot, Inc. (NYSE:HD), and Paypal Holdings Inc (NASDAQ:PYPL). This group of stocks’ market valuations resemble JPM’s market valuation.

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As you can see these stocks had an average of 112.3 hedge funds with bullish positions and the average amount invested in these stocks was $12168 million. That figure was $6967 million in JPM’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand The Home Depot, Inc. (NYSE:HD) is the least popular one with only 79 bullish hedge fund positions. JPMorgan Chase & Co. (NYSE:JPM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JPM is 63.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on JPM as the stock returned 21.7% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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