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One Bank of America Corp (BAC) Indicator You’re Probably Missing

Is Bank of America Corp (NYSE:BAC) worth your attention right now? Money managers are in a pessimistic mood. The number of long hedge fund positions retreated by 8 recently.

To most traders, hedge funds are seen as unimportant, outdated financial tools of the past. While there are more than 8000 funds with their doors open today, we look at the top tier of this group, about 450 funds. It is widely believed that this group oversees most of the hedge fund industry’s total capital, and by paying attention to their highest performing stock picks, we have discovered a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 (explore the details and some picks here).

Equally as integral, positive insider trading sentiment is a second way to break down the stock market universe. There are lots of reasons for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this tactic if piggybackers know where to look (learn more here).

With these “truths” under our belt, we’re going to take a glance at the key action surrounding Bank of America Corp (NYSE:BAC).

What does the smart money think about Bank of America Corp (NYSE:BAC)?

Heading into Q2, a total of 93 of the hedge funds we track held long positions in this stock, a change of -8% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings significantly.

Bank of America Corp (NYSE:BAC)Of the funds we track, Bruce Berkowitz’s Fairholme (FAIRX) had the most valuable position in Bank of America Corp (NYSE:BAC), worth close to $1.2252 billion, accounting for 15.6% of its total 13F portfolio. The second largest stake is held by Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, which held a $465.4 million position; 6.4% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Kerr Neilson’s Platinum Asset Management, Richard S. Pzena’s Pzena Investment Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as Bank of America Corp (NYSE:BAC) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers who sold off their positions entirely heading into Q2. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of all the hedgies we watch, worth close to $174.7 million in stock.. Ken Heebner’s fund, Capital Growth Management, also cut its stock, about $152.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 8 funds heading into Q2.

What do corporate executives and insiders think about Bank of America Corp (NYSE:BAC)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past six months. Over the latest six-month time frame, Bank of America Corp (NYSE:BAC) has experienced 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

With the returns demonstrated by our time-tested strategies, retail investors must always watch hedge fund and insider trading activity, and Bank of America Corp (NYSE:BAC) is no exception.

Click here to learn why you should track hedge funds

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