Bank of America Corp (NYSE:BAC) was in 93 hedge funds’ portfolio at the end of the fourth quarter of 2012. BAC has experienced an increase in enthusiasm from smart money of late. There were 92 hedge funds in our database with BAC holdings at the end of the previous quarter.
To most investors, hedge funds are perceived as worthless, old financial tools of yesteryear. While there are greater than 8000 funds trading at present, we look at the bigwigs of this club, close to 450 funds. It is widely believed that this group oversees the lion’s share of the hedge fund industry’s total capital, and by monitoring their highest performing investments, we have revealed a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as important, bullish insider trading activity is a second way to parse down the world of equities. There are plenty of reasons for an executive to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).
Now, we’re going to take a glance at the recent action regarding Bank of America Corp (NYSE:BAC).
What have hedge funds been doing with Bank of America Corp (NYSE:BAC)?
At year’s end, a total of 93 of the hedge funds we track held long positions in this stock, a change of 1% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly.
According to our comprehensive database, Bruce Berkowitz’s Fairholme (FAIRX) had the largest position in Bank of America Corp (NYSE:BAC), worth close to $1.1659 billion, accounting for 16.8% of its total 13F portfolio. Coming in second is Platinum Asset Management, managed by Kerr Neilson, which held a $434 million position; the fund has 9.7% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, Paul Ruddockáand Steve Heinz’s Lansdowne Partners and Richard S. Pzena’s Pzena Investment Management.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Lansdowne Partners, managed by Paul Ruddockáand Steve Heinz, assembled the most valuable position in Bank of America Corp (NYSE:BAC). Lansdowne Partners had 307.8 million invested in the company at the end of the quarter. John Armitage’s Egerton Capital Limited also initiated a $148.2 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Rob Citrone’s Discovery Capital Management, and Kevin Michael Ulrich’s Anchorage Advisors.
How have insiders been trading Bank of America Corp (NYSE:BAC)?
Bullish insider trading is best served when the company in focus has seen transactions within the past half-year. Over the latest 180-day time period, Bank of America Corp (NYSE:BAC) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Bank of America Corp (NYSE:BAC). These stocks are Toronto-Dominion Bank (USA) (NYSE:TD), Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU), Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co. (NYSE:JPM), and Citigroup Inc. (NYSE:C). This group of stocks belong to the money center banks industry and their market caps resemble BAC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Toronto-Dominion Bank (USA) (NYSE:TD) | 10 | 0 | 0 |
| Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU) | 12 | 0 | 0 |
| Wells Fargo & Co (NYSE:WFC) | 80 | 1 | 3 |
| JPMorgan Chase & Co. (NYSE:JPM) | 93 | 1 | 7 |
| Citigroup Inc. (NYSE:C) | 108 | 2 | 1 |
With the returns exhibited by the aforementioned time-tested strategies, everyday investors must always monitor hedge fund and insider trading activity, and Bank of America Corp (NYSE:BAC) shareholders fit into this picture quite nicely.
