Hedge Funds Are Growing More Confident in M&T Bank Corporation (MTB)

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Is M&T Bank Corporation (NYSE:MTB) a superb investment right now? Prominent investors are taking an optimistic view. The number of long hedge fund positions advanced by 4 lately. At the end of this article we will also compare MTB to other stocks including Deutsche Bank AG (USA) (NYSE:DB), Nielsen Hldg NV (NYSE:NLSN), and Level 3 Communications, Inc. (NYSE:LVLT) to get a better sense of its popularity.

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How have hedgies been trading M&T Bank Corporation (NYSE:MTB)?

Heading into the fourth quarter of 2016, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 22% from the second quarter of 2016, pushing the stock’s ownership among hedgies to a yearly high. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the biggest position in M&T Bank Corporation (NYSE:MTB), worth close to $624.9 million. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $55.8 million position. Remaining hedge funds and institutional investors that hold long positions encompass Cliff Asness’ AQR Capital Management, Mario Gabelli’s GAMCO Investors and Francois Rochon’s Giverny Capital.

With general bullishness amongst the heavyweights, key money managers have jumped into M&T Bank Corporation (NYSE:MTB) headfirst. Basswood Capital, managed by Matthew Lindenbaum, established the largest position in M&T Bank Corporation (NYSE:MTB). Basswood Capital had $4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $2.9 million position during the quarter. The following funds were also among the new MTB investors: Solomon Kumin’s Folger Hill Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Paul Tudor Jones’ Tudor Investment Corp.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as M&T Bank Corporation (NYSE:MTB) but similarly valued. We will take a look at Deutsche Bank AG (USA) (NYSE:DB), Nielsen Hldg NV (NYSE:NLSN), Level 3 Communications, Inc. (NYSE:LVLT), and Moody’s Corporation (NYSE:MCO). This group of stocks’ market values resemble MTB’s market value.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.84 billion. That figure was $786 million in MTB’s case. Level 3 Communications, Inc. (NYSE:LVLT) is the most popular stock in this table. On the other hand Deutsche Bank AG (USA) (NYSE:DB) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks M&T Bank Corporation (NYSE:MTB) is only as popular as the least-popular stock, DB. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None