Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Truist Financial Corporation (NYSE:TFC) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Truist Financial Corporation (NYSE:TFC) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. TFC investors should pay attention to a decrease in hedge fund sentiment of late. There were 39 hedge funds in our database with TFC positions at the end of the second quarter. Our calculations also showed that TFC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. Keeping this in mind we’re going to go over the fresh hedge fund action surrounding Truist Financial Corporation (NYSE:TFC).
Israel Englander of Millennium Management
Do Hedge Funds Think TFC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in TFC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Truist Financial Corporation (NYSE:TFC), which was worth $45.8 million at the end of the third quarter. On the second spot was PAR Capital Management which amassed $39.6 million worth of shares. Prana Capital Management, D E Shaw, and Bridgewater Associates 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 Soapstone Capital allocated the biggest weight to Truist Financial Corporation (NYSE:TFC), around 6.16% of its 13F portfolio. Prana Capital Management is also relatively very bullish on the stock, earmarking 3.36 percent of its 13F equity portfolio to TFC.
Because Truist Financial Corporation (NYSE:TFC) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that decided to sell off their positions entirely heading into Q4. Interestingly, Matthew Stadelman’s Diamond Hill Capital dumped the largest investment of the 750 funds followed by Insider Monkey, worth an estimated $435.3 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $52.6 million worth. These transactions are important to note, as total hedge fund interest fell by 5 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Truist Financial Corporation (NYSE:TFC). These stocks are HCA Healthcare Inc (NYSE:HCA), Zoom Video Communications, Inc. (NASDAQ:ZM), Marsh & McLennan Companies, Inc. (NYSE:MMC), General Motors Company (NYSE:GM), Fidelity National Information Services Inc. (NYSE:FIS), Duke Energy Corporation (NYSE:DUK), and Crown Castle International Corp. (NYSE:CCI). This group of stocks’ market values are closest to TFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HCA | 72 | 3309822 | 12 |
| ZM | 56 | 6003836 | -3 |
| MMC | 42 | 1987176 | 1 |
| GM | 77 | 6416552 | -9 |
| FIS | 69 | 6044245 | -3 |
| DUK | 32 | 687541 | -4 |
| CCI | 45 | 2089073 | 3 |
| Average | 56.1 | 3791178 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.1 hedge funds with bullish positions and the average amount invested in these stocks was $3791 million. That figure was $276 million in TFC’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Duke Energy Corporation (NYSE:DUK) is the least popular one with only 32 bullish hedge fund positions. Truist Financial Corporation (NYSE:TFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TFC is 24.9. 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 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 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on TFC as the stock returned 7.9% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Truist Financial Corp (NYSE:TFC)
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Disclosure: None. This article was originally published at Insider Monkey.
