Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Here’s What Hedge Funds Think About The Bank of Nova Scotia (BNS)

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

The Bank of Nova Scotia (NYSE:BNS) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the first quarter of 2019. At the end of this article we will also compare BNS to other stocks including Canadian National Railway Company (NYSE:CNI), Chubb Limited (NYSE:CB), and Eni SpA (NYSE:E) to get a better sense of its popularity.

At the moment there are numerous signals stock traders employ to value publicly traded companies. Some of the most underrated signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outperform their index-focused peers by a superb amount (see the details here).

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

We’re going to analyze the new hedge fund action regarding The Bank of Nova Scotia (NYSE:BNS).

What does smart money think about The Bank of Nova Scotia (NYSE:BNS)?

At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BNS over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with BNS Positions

Among these funds, Renaissance Technologies held the most valuable stake in The Bank of Nova Scotia (NYSE:BNS), which was worth $208.3 million at the end of the first quarter. On the second spot was Citadel Investment Group which amassed $194.2 million worth of shares. Moreover, AQR Capital Management, GLG Partners, and Bridgewater Associates were also bullish on The Bank of Nova Scotia (NYSE:BNS), allocating a large percentage of their portfolios to this stock.

Because The Bank of Nova Scotia (NYSE:BNS) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers that decided to sell off their entire stakes heading into Q3. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $0.6 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also sold off its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Bank of Nova Scotia (NYSE:BNS) but similarly valued. We will take a look at Canadian National Railway Company (NYSE:CNI), Chubb Limited (NYSE:CB), Eni SpA (NYSE:E), and Mitsubishi UFJ Financial Group Inc (NYSE:MUFG). This group of stocks’ market valuations are closest to BNS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CNI 17 2175473 -7
CB 23 466816 -1
E 9 99142 2
MUFG 14 47510 5
Average 15.75 697235 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $697 million. That figure was $519 million in BNS’s case. Chubb Limited (NYSE:CB) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 9 bullish hedge fund positions. The Bank of Nova Scotia (NYSE:BNS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BNS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BNS investors were disappointed as the stock returned 2.3% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...