Were Hedge Funds Right About Piling Into U.S. Bancorp (USB)?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of U.S. Bancorp (NYSE:USB) based on that data.

U.S. Bancorp (NYSE:USB) investors should be aware of an increase in hedge fund interest in recent months. U.S. Bancorp (NYSE:USB) was in 60 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 53. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 48 hedge funds in our database with USB positions at the end of the third quarter. Our calculations also showed that USB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Daniel Sundheim D1 Capital

Daniel Sundheim of D1 Capital Partners

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. With all of this in mind we’re going to analyze the latest hedge fund action surrounding U.S. Bancorp (NYSE:USB).

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

At Q4’s end, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 50 hedge funds with a bullish position in USB a year ago. So, let’s see 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?

More specifically, Berkshire Hathaway was the largest shareholder of U.S. Bancorp (NYSE:USB), with a stake worth $6109.7 million reported as of the end of December. Trailing Berkshire Hathaway was D1 Capital Partners, which amassed a stake valued at $786.9 million. Yacktman Asset Management, Citadel Investment Group, and Schonfeld Strategic Advisors 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 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, setting aside 4.34 percent of its 13F equity portfolio to USB.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Carlson Capital, managed by Clint Carlson, initiated the most valuable 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 made a $24 million investment in the stock during the quarter. The other funds with brand new USB positions 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 now take a look at hedge fund activity in other stocks – not necessarily in the same industry as U.S. Bancorp (NYSE:USB) but similarly valued. These stocks are 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). This group of stocks’ market values are closest to USB’s market value.

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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on USB as the stock returned 28.4% since the end of Q4 (through 4/30) 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.