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Hedge Funds Nibbling On Mizuho Financial Group Inc. (MFG)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Mizuho Financial Group Inc. (NYSE:MFG).

Mizuho Financial Group Inc. (NYSE:MFG) has experienced an increase in support from the world’s most elite money managers recently. Our calculations also showed that MFG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are tons of signals shareholders employ to appraise stocks. A couple of the less known signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top money managers can trounce their index-focused peers by a healthy amount (see the details here).

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the new hedge fund action surrounding Mizuho Financial Group Inc. (NYSE:MFG).

What does smart money think about Mizuho Financial Group Inc. (NYSE:MFG)?

Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MFG over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, LMR Partners was the largest shareholder of Mizuho Financial Group Inc. (NYSE:MFG), with a stake worth $12 million reported as of the end of September. Trailing LMR Partners was Renaissance Technologies, which amassed a stake valued at $10 million. D E Shaw, Millennium Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to Mizuho Financial Group Inc. (NYSE:MFG), around 1% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to MFG.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, assembled the most valuable position in Mizuho Financial Group Inc. (NYSE:MFG). LMR Partners had $12 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Mizuho Financial Group Inc. (NYSE:MFG) but similarly valued. These stocks are Dell Technologies Inc. (NYSE:DELL), Emerson Electric Co. (NYSE:EMR), The Allstate Corporation (NYSE:ALL), and Electronic Arts Inc. (NASDAQ:EA). This group of stocks’ market valuations are closest to MFG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DELL 39 1967686 -2
EMR 33 434014 -8
ALL 43 1535993 6
EA 73 1987020 5
Average 47 1481178 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $1481 million. That figure was $24 million in MFG’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Emerson Electric Co. (NYSE:EMR) is the least popular one with only 33 bullish hedge fund positions. Compared to these stocks Mizuho Financial Group Inc. (NYSE:MFG) is even less popular than EMR. Hedge funds dodged a bullet by taking a bearish stance towards MFG. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately MFG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MFG investors were disappointed as the stock returned 13.4% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.