We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards M&T Bank Corporation (NYSE:MTB) and determine whether hedge funds skillfully traded this stock.
Is M&T Bank Corporation (NYSE:MTB) a good investment right now? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions went up by 9 lately. M&T Bank Corporation (NYSE:MTB) was in 30 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 42. Our calculations also showed that MTB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 21 hedge funds in our database with MTB positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are seen as unimportant, outdated financial vehicles of years past. While there are over 8000 funds in operation today, Our researchers choose to focus on the upper echelon of this club, around 850 funds. It is estimated that this group of investors direct the lion’s share of the smart money’s total capital, and by tracking their unrivaled picks, Insider Monkey has deciphered a number of investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s analyze the new hedge fund action surrounding M&T Bank Corporation (NYSE:MTB).
What have hedge funds been doing with M&T Bank Corporation (NYSE:MTB)?
At the end of the second quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MTB over the last 20 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Berkshire Hathaway, managed by Warren Buffett, holds the number one position in M&T Bank Corporation (NYSE:MTB). Berkshire Hathaway has a $471.6 million position in the stock, comprising 0.2% of its 13F portfolio. On Berkshire Hathaway’s heels is Cliff Asness of AQR Capital Management, with a $43.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions contain Brandon Haley’s Holocene Advisors, Bernard Horn’s Polaris Capital Management and Israel Englander’s Millennium Management. 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 1.26% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, designating 0.76 percent of its 13F equity portfolio to MTB.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Holocene Advisors, managed by Brandon Haley, assembled the largest position in M&T Bank Corporation (NYSE:MTB). Holocene Advisors had $31.7 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $3.2 million investment in the stock during the quarter. The other funds with new positions in the stock are David Rodriguez-Fraile’s BlueMar Capital Management, Gregg Moskowitz’s Interval Partners, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to M&T Bank Corporation (NYSE:MTB). These stocks are Sun Communities Inc (NYSE:SUI), Magna International Inc. (NYSE:MGA), Leidos Holdings Inc (NYSE:LDOS), Wix.Com Ltd (NASDAQ:WIX), Masco Corporation (NYSE:MAS), The Liberty SiriusXM Group (NASDAQ:LSXMA), and Western Digital Corporation (NASDAQ:WDC). All of these stocks’ market caps match MTB’s market cap.
|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 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $784 million. That figure was $658 million in MTB’s case. Western Digital Corporation (NASDAQ:WDC) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 19 bullish hedge fund positions. M&T Bank Corporation (NYSE:MTB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MTB is 49.8. 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 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately MTB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MTB investors were disappointed as the stock returned 1.3% since Q2 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.