Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards U.S. Bancorp (NYSE:USB).
Is U.S. Bancorp (NYSE:USB) a great investment today? The smart money was selling. The number of bullish hedge fund bets dropped by 2 recently. U.S. Bancorp (NYSE:USB) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 60. Our calculations also showed that USB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Warren Buffett of Berkshire Hathaway
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 are checking out stock pitches like this emerging lithium 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. With all of this in mind we’re going to take a glance at the latest hedge fund action surrounding U.S. Bancorp (NYSE:USB).
Do Hedge Funds Think USB Is A Good Stock To Buy Now?
At the end of June, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 48 hedge funds with a bullish position in USB a year ago. So, let’s examine 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 $7342.8 million at the end of the second quarter. On the second spot was Yacktman Asset Management which amassed $269.2 million worth of shares. Citadel Investment Group, Schonfeld Strategic Advisors, and Adage 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 Prana Capital Management allocated the biggest weight to U.S. Bancorp (NYSE:USB), around 4.43% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, designating 3.88 percent of its 13F equity portfolio to USB.
Due to the fact that U.S. Bancorp (NYSE:USB) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes by the end of the second quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest investment of all the hedgies followed by Insider Monkey, comprising about $52 million in stock, and Michael Anderson’s Hi-Line Capital Management was right behind this move, as the fund cut about $7.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the second quarter.
Let’s also examine hedge fund activity in other stocks similar to U.S. Bancorp (NYSE:USB). These stocks are Automatic Data Processing, Inc. (NASDAQ:ADP), Crown Castle International Corp. (REIT)(NYSE:CCI), ConocoPhillips (NYSE:COP), The TJX Companies, Inc. (NYSE:TJX), Cigna Corporation (NYSE:CI), Enbridge Inc (NYSE:ENB), and The PNC Financial Services Group Inc. (NYSE:PNC). This group of stocks’ market caps match USB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADP | 41 | 3018791 | -1 |
| CCI | 42 | 2093903 | -1 |
| COP | 50 | 1158596 | -1 |
| TJX | 56 | 2387336 | -7 |
| CI | 63 | 2807451 | 10 |
| ENB | 19 | 166071 | -3 |
| PNC | 38 | 727612 | -1 |
| Average | 44.1 | 1765680 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.1 hedge funds with bullish positions and the average amount invested in these stocks was $1766 million. That figure was $8306 million in USB’s case. Cigna Corporation (NYSE:CI) is the most popular stock in this table. On the other hand Enbridge Inc (NYSE:ENB) is the least popular one with only 19 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. Our overall hedge fund sentiment score for USB is 48.5. 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 negative signal and 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 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately USB wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); USB investors were disappointed as the stock returned 7.3% since the end of June (through 11/5) 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 most of these stocks already outperformed the market in 2021.
Follow Us Bancorp (NYSE:USB)
Follow Us Bancorp (NYSE:USB)
Suggested Articles:
- 12 Most Famous Monopolies of All Time
- 10 Best Alternative Energy Stocks to Buy Now
- 11 Best Clean Energy Stocks To Buy
Disclosure: None. This article was originally published at Insider Monkey.
