Is U.S. Bancorp (NYSE:USB) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
U.S. Bancorp (NYSE:USB) was in 39 hedge funds’ portfolios at the end of the third quarter of 2018. USB has seen an increase in hedge fund sentiment in recent months. There were 30 hedge funds in our database with USB positions at the end of the previous quarter. Our calculations also showed that USB isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a gander at the key hedge fund action surrounding U.S. Bancorp (NYSE:USB).
Hedge fund activity in U.S. Bancorp (NYSE:USB)
At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. On the other hand, there were a total of 45 hedge funds with a bullish position in USB at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Berkshire Hathaway held the most valuable stake in U.S. Bancorp (NYSE:USB), which was worth $6597.2 million at the end of the third quarter. On the second spot was Yacktman Asset Management which amassed $237.5 million worth of shares. Moreover, AQR Capital Management, Adage Capital Management, and Basswood Capital were also bullish on U.S. Bancorp (NYSE:USB), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in U.S. Bancorp (NYSE:USB). Balyasny Asset Management had $60.5 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also initiated a $10.1 million position during the quarter. The other funds with brand new USB positions are Israel Englander’s Millennium Management, George Hall’s Clinton Group, and Ian Simm’s Impax Asset Management.
Let’s check out hedge fund activity in other stocks similar to U.S. Bancorp (NYSE:USB). These stocks are HDFC Bank Limited (NYSE:HDB), Twenty-First Century Fox Inc (NASDAQ:FOX), The Goldman Sachs Group, Inc. (NYSE:GS), and Schlumberger Limited. (NYSE:SLB). This group of stocks’ market values resemble USB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HDB | 27 | 990230 | 3 |
| FOX | 49 | 5335990 | 6 |
| GS | 57 | 6876991 | -4 |
| SLB | 55 | 1514319 | 12 |
| Average | 47 | 3679383 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $3.68 billion. That figure was $7.39 billion in USB’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand HDFC Bank Limited (NYSE:HDB) is the least popular one with only 27 bullish hedge fund positions. U.S. Bancorp (NYSE:USB) 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 piling on. In this regard GS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
