Is MTB Stock A Buy or Sell?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of M&T Bank Corporation (NYSE:MTB).

Is MTB stock a buy? Prominent investors were taking a pessimistic view. The number of long hedge fund positions dropped by 2 lately. M&T Bank Corporation (NYSE:MTB) was in 33 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 42. Our calculations also showed that MTB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 35 hedge funds in our database with MTB 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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. With all of this in mind we’re going to go over the new hedge fund action encompassing M&T Bank Corporation (NYSE:MTB).

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

At fourth quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MTB over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Adage Capital Management was the largest shareholder of M&T Bank Corporation (NYSE:MTB), with a stake worth $86.4 million reported as of the end of December. Trailing Adage Capital Management was AQR Capital Management, which amassed a stake valued at $49 million. Polaris Capital Management, Marshall Wace LLP, and Arrowstreet Capital 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 1.79% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 1.36 percent of its 13F equity portfolio to MTB.

Since M&T Bank Corporation (NYSE:MTB) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that decided to sell off their full holdings by the end of the fourth quarter. Interestingly, Warren Buffett’s Berkshire Hathaway cut the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $268.9 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund dropped about $7 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds by the end of the fourth quarter.

Let’s now review hedge fund activity in other stocks similar to M&T Bank Corporation (NYSE:MTB). These stocks are Nomura Holdings, Inc. (NYSE:NMR), Avantor, Inc. (NYSE:AVTR), Healthpeak Properties, Inc. (NYSE:PEAK), Hess Corporation (NYSE:HES), Ulta Beauty, Inc. (NASDAQ:ULTA), Steris Plc (NYSE:STE), and Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). All of these stocks’ market caps are closest to MTB’s market cap.

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As you can see these stocks had an average of 35.9 hedge funds with bullish positions and the average amount invested in these stocks was $1255 million. That figure was $383 million in MTB’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 6 bullish hedge fund positions. M&T Bank Corporation (NYSE:MTB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTB is 53.6. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. A small number of hedge funds were also right about betting on MTB as the stock returned 21.2% since the end of the fourth quarter (through 4/1) and outperformed the market by an even larger margin.

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