In this article we will analyze whether State Street Corporation (NYSE:STT) 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.
Is State Street Corporation (NYSE:STT) a buy right now? The best stock pickers were buying. The number of bullish hedge fund bets increased by 5 in recent months. State Street Corporation (NYSE:STT) was in 42 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. Our calculations also showed that STT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 37 hedge funds in our database with STT positions at the end of the second quarter.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to go over the fresh hedge fund action regarding State Street Corporation (NYSE:STT).
Do Hedge Funds Think STT Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the second quarter of 2021. By comparison, 34 hedge funds held shares or bullish call options in STT a year ago. 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, Yacktman Asset Management was the largest shareholder of State Street Corporation (NYSE:STT), with a stake worth $297.3 million reported as of the end of September. Trailing Yacktman Asset Management was Citadel Investment Group, which amassed a stake valued at $169.7 million. Millennium Management, Balyasny Asset Management, and Schonfeld Strategic Advisors 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 Prana Capital Management allocated the biggest weight to State Street Corporation (NYSE:STT), around 7% of its 13F portfolio. Yacktman Asset Management is also relatively very bullish on the stock, dishing out 2.86 percent of its 13F equity portfolio to STT.
Consequently, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in State Street Corporation (NYSE:STT). Balyasny Asset Management had $90.1 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $55.6 million position during the quarter. The following funds were also among the new STT investors: Frank Fu’s CaaS Capital, Dmitry Balyasny’s Balyasny Asset Management, and Stuart J. Zimmer’s Zimmer Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as State Street Corporation (NYSE:STT) but similarly valued. We will take a look at AvalonBay Communities Inc (NYSE:AVB), Corteva, Inc. (NYSE:CTVA), Seagen Inc. (NASDAQ:SGEN), Equifax Inc. (NYSE:EFX), McKesson Corporation (NYSE:MCK), Public Service Enterprise Group Incorporated (NYSE:PEG), and Suncor Energy Inc. (NYSE:SU). All of these stocks’ market caps match STT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVB | 28 | 376882 | 2 |
| CTVA | 41 | 1161923 | 7 |
| SGEN | 40 | 9471190 | 3 |
| EFX | 43 | 3360148 | 6 |
| MCK | 51 | 2277126 | 0 |
| PEG | 26 | 518847 | 0 |
| SU | 32 | 1084858 | 0 |
| Average | 37.3 | 2607282 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $2607 million. That figure was $1480 million in STT’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 26 bullish hedge fund positions. State Street Corporation (NYSE:STT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STT is 70. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately STT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STT were disappointed as the stock returned 5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow State Street Corp (NYSE:STT)
Follow State Street Corp (NYSE:STT)
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Disclosure: None. This article was originally published at Insider Monkey.
