Is American Express Company (AXP) Going to Burn These Hedge Funds?

In this article we will analyze whether American Express Company (NYSE:AXP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

American Express Company (NYSE:AXP) shareholders have witnessed an increase in support from the world’s most elite money managers of late. American Express Company (NYSE:AXP) was in 57 hedge funds’ portfolios at the end of September. The all time high for this statistic is 60. Our calculations also showed that AXP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to view the key hedge fund action encompassing American Express Company (NYSE:AXP).

Mario Gabelli of GAMCO Investors

Do Hedge Funds Think AXP Is A Good Stock To Buy Now?

At third quarter’s end, a total of 57 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AXP over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, Berkshire Hathaway was the largest shareholder of American Express Company (NYSE:AXP), with a stake worth $25399.3 million reported as of the end of September. Trailing Berkshire Hathaway was Fisher Asset Management, which amassed a stake valued at $2617.5 million. Arrowstreet Capital, 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 17.25% of its 13F portfolio. Berkshire Hathaway is also relatively very bullish on the stock, designating 8.66 percent of its 13F equity portfolio to AXP.

As one would reasonably expect, key money managers have jumped into American Express Company (NYSE:AXP) headfirst. Junto Capital Management, managed by James Parsons, created the most outsized position in American Express Company (NYSE:AXP). Junto Capital Management had $82.7 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $46.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Usman Waheed’s Strycker View Capital, Kamyar Khajavi’s MIK Capital, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s check out hedge fund activity in other stocks similar to American Express Company (NYSE:AXP). We will take a look at Bristol Myers Squibb Company (NYSE:BMY), Starbucks Corporation (NASDAQ:SBUX), Raytheon Technologies Corp (NYSE:RTX), The Boeing Company (NYSE:BA), Union Pacific Corporation (NYSE:UNP), BlackRock, Inc. (NYSE:BLK), and The Goldman Sachs Group, Inc. (NYSE:GS). This group of stocks’ market caps resemble AXP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BMY 74 4758551 1
SBUX 58 4807317 -5
RTX 48 2259405 -5
BA 50 1431242 -9
UNP 63 4886422 -6
BLK 44 1085328 -3
GS 74 5451988 13
Average 58.7 3525750 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 58.7 hedge funds with bullish positions and the average amount invested in these stocks was $3526 million. That figure was $29603 million in AXP’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand BlackRock, Inc. (NYSE:BLK) is the least popular one with only 44 bullish hedge fund positions. American Express Company (NYSE:AXP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AXP is 60.2. 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. 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 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately AXP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AXP investors were disappointed as the stock returned -8.9% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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