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Hedge Funds Souring On M&T Bank Corporation (MTB)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of M&T Bank Corporation (NYSE:MTB).

Is M&T Bank Corporation (NYSE:MTB) a buy right now? Prominent investors are getting less optimistic. The number of long hedge fund bets fell by 11 in recent months. Our calculations also showed that MTB 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). MTB was in 21 hedge funds’ portfolios at the end of the first quarter of 2020. There were 32 hedge funds in our database with MTB holdings at the end of the previous quarter.

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

hedge funds vs. mutual funds

Warren Buffett of Berkshire Hathaway

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 trades like this one. 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 let’s go over the recent hedge fund action surrounding M&T Bank Corporation (NYSE:MTB).

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

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -34% from one quarter earlier. On the other hand, there were a total of 36 hedge funds with a bullish position in MTB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Berkshire Hathaway was the largest shareholder of M&T Bank Corporation (NYSE:MTB), with a stake worth $556.7 million reported as of the end of September. Trailing Berkshire Hathaway was AQR Capital Management, which amassed a stake valued at $46.1 million. Polaris Capital Management, Two Sigma Advisors, and D E Shaw 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 Polaris Capital Management allocated the biggest weight to M&T Bank Corporation (NYSE:MTB), around 1.5% of its 13F portfolio. Berkshire Hathaway is also relatively very bullish on the stock, dishing out 0.32 percent of its 13F equity portfolio to MTB.

Judging by the fact that M&T Bank Corporation (NYSE:MTB) has experienced a decline in interest from hedge fund managers, we can see that there was a specific group of money managers that decided to sell off their entire stakes by the end of the first quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dumped the largest position of all the hedgies monitored by Insider Monkey, totaling close to $51.6 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund dropped about $36.8 million worth. These moves are important to note, as total hedge fund interest dropped by 11 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to M&T Bank Corporation (NYSE:MTB). These stocks are W.W. Grainger, Inc. (NYSE:GWW), CDW Corporation (NASDAQ:CDW), Deutsche Bank Aktiengesellschaft (NYSE:DB), and BioNTech SE (NASDAQ:BNTX). This group of stocks’ market valuations are closest to MTB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GWW 26 345842 -3
CDW 36 947126 6
DB 12 916383 0
BNTX 6 37923 2
Average 20 561819 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $687 million in MTB’s case. CDW Corporation (NASDAQ:CDW) is the most popular stock in this table. On the other hand BioNTech SE (NASDAQ:BNTX) is the least popular one with only 6 bullish hedge fund positions. M&T Bank Corporation (NYSE:MTB) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately MTB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MTB were disappointed as the stock returned 7.5% during the same time period 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 many of these stocks already outperformed the market so far this year.

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