AIG, AllState, Blackhawk: Hedge Funds Weren’t Fans of These 5 Finance Stocks Last Quarter

With the latest quarterly 13F filings having been released, Insider Monkey has done the hard work of parsing through the position changes among the collection of hedge funds in our database during the second quarter, 749 of which filed 13F’s for the June 30 reporting period.

In this article, we’ll take a closer look at five financial stocks, American International Group Inc (NYSE:AIG), PacWest Bancorp (NASDAQ:PACW), Bank of New York Mellon Corp (NYSE:BK), Allstate Corp (NYSE:ALL), and Blackhawk Network Holdings Inc (NASDAQ:HAWK), which the smart money became less bullish on between March 31 and June 30.

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#5 American International Group Inc (NYSE:AIG)

– Number of Hedge Fund Shareholders (as of June 30): 85
– Total Value of Hedge Funds’ Holdings (as of June 30): $7.28 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 12.30%

85 funds that we track owned shares of American International Group Inc (NYSE:AIG) at the end of the second quarter, down by nine funds from the end of the previous quarter. Although AIG is widely regarded as a core holding for many investors given its cheap price-to-book ratio and the quality of its business lines, some hedge funds may have sold the stock due to Britain’s decision to leave the EU on June 23. Given the strong U.S. economy and the upcoming interest rate hikes over the next few years, we wouldn’t be surprised to see some funds rotate back into the stock in the third quarter.

#4 PacWest Bancorp (NASDAQ:PACW)

– Number of Hedge Fund Shareholders (as of June 30): 15
– Total Value of Hedge Funds’ Holdings (as of June 30): $267.41 million
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 5.60%

The number of funds with positions in PacWest Bancorp (NASDAQ:PACW) fell by ten quarter-over-quarter to 15 at the end of June. Like AIG, some funds may have sold off their stake due to Britain’s Brexit decision on June 23. Because Britain decided to leave the EU, many investors thought the Federal Reserve would keep interest rates lower for longer to prevent any sort of serious damage to the U.S. economy, which will keep PacWest’s interest income lower. Ken Fisher‘s Fisher Asset Management lowered its stake in PacWest by 1% in the second quarter, to 2.14 milion shares at the end of June.

We’ll check out three more finance stocks that lost some favor with hedge funds in the June quarter on the next page.

#3 Bank of New York Mellon Corp (NYSE:BK)

– Number of Hedge Fund Shareholders (as of June 30): 41
– Total Value of Hedge Funds’ Holdings (as of June 30): $4.59 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 11.00%

A net total of 11 hedge funds sold out of Bank of New York Mellon Corp (NYSE:BK) in the second quarter, making it the third-most widely sold financial stock on our list. Although Bank of New York Mellon doesn’t have as much exposure to Britain as some of its larger peers, the bank will still face additional expenses in terms of moving its financial operations to the continent to maintain access to the EU’s ‘One Market’. Also hurting Bank of New York Mellon among the smart money set may be the company’s valuation and dividend yield. With a forward P/E of 12 and dividend yield of 1.86%, Bank of New York Mellon doesn’t scream cheap as much as some of the bank’s larger peers.

#2 Allstate Corp (NYSE:ALL)

– Number of Hedge Fund Shareholders (as of June 30): 29
– Total Value of Hedge Funds’ Holdings (as of June 30): $1.07 billion
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 4.10%

Like Bank of New York Mellon Corp, there were 11 fewer funds long Allstate Corp (NYSE:ALL) on June 30 than there had been on March 31, with Ray Dalio‘s Bridgewater Associates being one of the prominent investors to sell of its position. Hurting sentiment in the second quarter was a mixed earnings report released in May, in which Allstate beat earnings estimates by $0.15 per share but missed revenue expectations by $90 million. Like AIG, some hedge funds may have sold out of Allstate due to the Brexit decision. Given that the market isn’t as concerned about the Brexit anymore and the U.S. economy is strong, Allstate shares look promising in the long-term.

#1 Blackhawk Network Holdings Inc (NASDAQ:HAWK)

– Number of Hedge Fund Shareholders (as of June 30): 22
– Total Value of Hedge Funds’ Holdings (as of June 30): $335.3 million
– Hedge Funds’ Holdings as Percent of Float (as of June 30): 17.80%

With a net total of 13 funds selling out of the stock from March 31 to June 30, Blackhawk Network Holdings Inc (NASDAQ:HAWK) was the most-widely sold financial stock among the hedge funds in our database during the second quarter. Blackhawk reported mixed earnings in April, with EPS of $0.46 on revenue of $184.6 million, beating profit estimates by $0.14 per share but missing revenue expectations by $13.37 million. Despite the mixed earnings in April, analysts as a whole are bullish. They have an average price target of $39.10 on the stock, suggesting that shares have 15% upside potential.

Disclosure: None