Is Itau Unibanco Holding SA (ADR) (ITUB) A Good Stock To Buy?

Due to the fact that Itau Unibanco Holding SA (ADR) (NYSE:ITUB) has witnessed bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of money managers who were dropping their full holdings heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest position of all the hedgies monitored by Insider Monkey, totaling close to $45.5 million in stock, and Orlando Muyshondt’s Tyrian Investments was right behind this move, as the fund sold off about $19 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Itau Unibanco Holding SA (ADR) (NYSE:ITUB). These stocks are EOG Resources Inc (NYSE:EOG), Monsanto Company (NYSE:MON), Kimberly Clark Corp (NYSE:KMB), and Caterpillar Inc. (NYSE:CAT). This group of stocks’ market values are closest to ITUB’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EOG 60 1539301 3
MON 60 3048446 -4
KMB 34 1189525 3
CAT 40 1236703 10

As you can see these stocks had an average of 48.5 hedge funds with bullish positions and the average amount invested in these stocks was $1753 million. That figure was $264 million in ITUB’s case. EOG Resources Inc (NYSE:EOG) is the most popular stock in this table. On the other hand Kimberly Clark Corp (NYSE:KMB) is the least popular one with only 34 bullish hedge fund positions. Compared to these stocks Itau Unibanco Holding SA (ADR) (NYSE:ITUB) is even less popular than KMB. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.