Hedge Funds Are Betting On Bank of America Corp (BAC)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Bank of America Corp (NYSE:BAC) in this article.

Bank of America Corp (NYSE:BAC) has experienced an increase in support from the world’s most elite money managers in recent months.

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In the eyes of most market participants, hedge funds are viewed as slow, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, Hedge fund experts at Insider Monkey look at the moguls of this group, around 700 funds. These hedge fund managers direct the bulk of all hedge funds’ total capital, and by paying attention to their first-class investments, Insider Monkey has identified a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 18 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s take a glance at the key action surrounding Bank of America Corp (NYSE:BAC).

What have hedge funds been doing with Bank of America Corp (NYSE:BAC)?

At Q3’s end, a total of 108 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of 14% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.

According to hedge fund experts at Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the number one position in Bank of America Corp (NYSE:BAC). Fisher Asset Management has a $665.1 million position in the stock, comprising 1.4% of its 13F portfolio. Coming in second is Boykin Curry of Eagle Capital Management, with a $475.6 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Richard S. Pzena’s Pzena Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Bruce Berkowitz’s Fairholme (FAIRX).

As aggregate interest increased, some big names were leading the bulls’ herd. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, created the most valuable position in Bank of America Corp (NYSE:BAC). Senator Investment Group had 116.9 million invested in the company at the end of the quarter. Tony Chedraoui’s Tyrus Capital also initiated a $90.4 million position during the quarter. The following funds were also among the new BAC investors: Howard Guberman’s Gruss Asset Management, Martin Hughes’s Toscafund Asset Management, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Let’s also examine hedge fund activity in other stocks similar to Bank of America Corp (NYSE:BAC). These stocks are Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT), Oracle Corporation (NASDAQ:ORCL), Visa Inc (NYSE:V), and Royal Dutch Shell plc (ADR) (NYSE:RDS). All of these stocks’ market caps are similar to BAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTT 12 133784 4
ORCL 57 7270832 -1
V 102 8569795 4
RDS 34 873203 -5

As you can see these stocks had an average of 51.25 hedge funds with bullish positions and the average amount invested in these stocks was4212 million dollars.