After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards American Express Company (NYSE:AXP).
Is AXP a good stock to buy? American Express Company (NYSE:AXP) was in 52 hedge funds’ portfolios at the end of June. The all time high for this statistic is 60. AXP investors should be aware of a decrease in hedge fund sentiment recently. There were 53 hedge funds in our database with AXP holdings at the end of March. Our calculations also showed that AXP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a gander at the fresh hedge fund action surrounding American Express Company (NYSE:AXP).
Do Hedge Funds Think AXP Is A Good Stock To Buy Now?
At the end of June, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AXP over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Berkshire Hathaway held the most valuable stake in American Express Company (NYSE:AXP), which was worth $25050.6 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $2539.6 million worth of shares. Citadel Investment Group, GAMCO Investors, and Citadel Investment Group 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 Aquamarine Capital Management allocated the biggest weight to American Express Company (NYSE:AXP), around 16.28% of its 13F portfolio. Berkshire Hathaway is also relatively very bullish on the stock, dishing out 8.55 percent of its 13F equity portfolio to AXP.
Due to the fact that American Express Company (NYSE:AXP) has faced a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies who were dropping their full holdings last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest position of the 750 funds tracked by Insider Monkey, totaling about $56 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund cut about $27.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as American Express Company (NYSE:AXP) but similarly valued. We will take a look at Starbucks Corporation (NASDAQ:SBUX), Sanofi (NASDAQ:SNY), International Business Machines Corp. (NYSE:IBM), Applied Materials, Inc. (NASDAQ:AMAT), Raytheon Technologies Corp (NYSE:RTX), The Goldman Sachs Group, Inc. (NYSE:GS), and The Toronto-Dominion Bank (NYSE:TD). This group of stocks’ market values are closest to AXP’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.3 hedge funds with bullish positions and the average amount invested in these stocks was $2798 million. That figure was $28660 million in AXP’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Sanofi (NASDAQ:SNY) is the least popular one with only 16 bullish hedge fund positions. American Express Company (NYSE:AXP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AXP is 61.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on AXP as the stock returned 5.5% since the end of Q2 (through 10/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.