Is U.S. Bancorp (USB) Stock A Buy or Sell?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about U.S. Bancorp (NYSE:USB).

Is U.S. Bancorp (USB) stock a buy or sell? Investors who are in the know were in a bullish mood. The number of long hedge fund bets went up by 12 in recent months. U.S. Bancorp (NYSE:USB) was in 60 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 53. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that USB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 48 hedge funds in our database with USB holdings at the end of September.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).


Ray Dalio of Bridgewater Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article). Keeping this in mind we’re going to take a glance at the latest hedge fund action surrounding U.S. Bancorp (NYSE:USB).

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

Heading into the first quarter of 2021, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards USB over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is USB A Good Stock To Buy?

The largest stake in U.S. Bancorp (NYSE:USB) was held by Berkshire Hathaway, which reported holding $6109.7 million worth of stock at the end of December. It was followed by D1 Capital Partners with a $786.9 million position. Other investors bullish on the company included Yacktman Asset Management, Citadel Investment Group, and Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Prana Capital Management allocated the biggest weight to U.S. Bancorp (NYSE:USB), around 8.67% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 4.34 percent of its 13F equity portfolio to USB.

As aggregate interest increased, key money managers have jumped into U.S. Bancorp (NYSE:USB) headfirst. Carlson Capital, managed by Clint Carlson, initiated the biggest position in U.S. Bancorp (NYSE:USB). Carlson Capital had $30.6 million invested in the company at the end of the quarter. Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital also initiated a $24 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, David Rodriguez-Fraile’s BlueMar Capital Management, and Ray Dalio’s Bridgewater Associates.

Let’s check out hedge fund activity in other stocks similar to U.S. Bancorp (NYSE:USB). We will take a look at Chubb Limited (NYSE:CB), BP plc (NYSE:BP), CSX Corporation (NYSE:CSX), FedEx Corporation (NYSE:FDX), Crown Castle International Corp. (NYSE:CCI), Lam Research Corporation (NASDAQ:LRCX), and Duke Energy Corporation (NYSE:DUK). All of these stocks’ market caps are closest to USB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CB 34 1188375 -11
BP 29 927478 -1
CSX 58 3315285 0
FDX 63 2012460 -8
CCI 40 2071704 -2
LRCX 56 2619776 1
DUK 38 614751 2
Average 45.4 1821404 -2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 45.4 hedge funds with bullish positions and the average amount invested in these stocks was $1821 million. That figure was $8135 million in USB’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. U.S. Bancorp (NYSE:USB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for USB is 85.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on USB as the stock returned 18.5% since the end of Q4 (through 3/19) 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.