Is BB&T Corporation (NYSE:BBT) ready to rally soon? Hedge funds are reducing their bets on the stock. The number of long hedge fund positions went down by 5 in recent months.
To most traders, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey look at the aristocrats of this group, about 450 funds. It is widely believed that this group has its hands on most of all hedge funds' total capital, and by monitoring their best investments, we have discovered a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as key, optimistic insider trading activity is another way to break down the investments you're interested in. Just as you'd expect, there are a variety of incentives for an executive to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the valuable potential of this strategy if "monkeys" know where to look (learn more here).
Consequently, let's take a look at the recent action regarding BB&T Corporation (NYSE:BBT).
At Q1's end, a total of 24 of the hedge funds we track were long in this stock, a change of -17% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly.
When looking at the hedgies we track, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the largest position in BB&T Corporation (NYSE:BBT). First Eagle Investment Management has a $424.9 million position in the stock, comprising 1.4% of its 13F portfolio. The second largest stake is held by Clint Carlson of Carlson Capital, with a $30.3 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Israel Englander's Millennium Management, D. E. Shaw's D E Shaw and Matthew Tewksbury's Stevens Capital Management.
Since BB&T Corporation (NYSE:BBT) has experienced bearish sentiment from the smart money, it's easy to see that there was a specific group of money managers that slashed their full holdings last quarter. It's worth mentioning that George Soros's Soros Fund Management cut the largest stake of the "upper crust" of funds we track, worth close to $13.1 million in stock.. Phill Gross and Robert Atchinson's fund, Adage Capital Management, also dumped its stock, about $11.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 5 funds last quarter.
Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time period, BB&T Corporation (NYSE:BBT) has seen 3 unique insiders purchasing, and 11 insider sales (see the details of insider trades here).
Let's check out hedge fund and insider activity in other stocks similar to BB&T Corporation (NYSE:BBT). These stocks are SCBT Financial Corporation (NASDAQ:SCBT), United Bankshares, Inc. (NASDAQ:UBSI), First Citizens BancShares Inc. (NASDAQ:FCNCA), Synovus Financial Corp. (NYSE:SNV), and BankUnited (NYSE:BKU). This group of stocks are the members of the regional - mid-atlantic banks industry and their market caps are similar to BBT's market cap.