With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was M&T Bank Corporation (NYSE:MTB).
M&T Bank Corporation (NYSE:MTB) investors should be aware of an increase in activity from the world’s largest hedge funds of late. M&T Bank Corporation (NYSE:MTB) was in 35 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 42. There were 30 hedge funds in our database with MTB positions at the end of the second quarter. Our calculations also showed that MTB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. 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 website. Keeping this in mind let’s go over the recent hedge fund action surrounding M&T Bank Corporation (NYSE:MTB).
Do Hedge Funds Think MTB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MTB over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Berkshire Hathaway was the largest shareholder of M&T Bank Corporation (NYSE:MTB), with a stake worth $268.9 million reported as of the end of September. Trailing Berkshire Hathaway was AQR Capital Management, which amassed a stake valued at $38.6 million. Citadel Investment Group, Polaris Capital Management, and Millennium Management 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 Polaris Capital Management allocated the biggest weight to M&T Bank Corporation (NYSE:MTB), around 1.28% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, designating 1.24 percent of its 13F equity portfolio to MTB.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in M&T Bank Corporation (NYSE:MTB). Arrowstreet Capital had $17.5 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $9.1 million position during the quarter. The other funds with new positions in the stock are Nathan Przybylo’s L2 Asset Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Qing Li’s Sciencast Management.
Let’s check out hedge fund activity in other stocks similar to M&T Bank Corporation (NYSE:MTB). These stocks are Atmos Energy Corporation (NYSE:ATO), Wabtec Corporation (NYSE:WAB), Live Nation Entertainment, Inc. (NYSE:LYV), Pembina Pipeline Corp (NYSE:PBA), Cheniere Energy, Inc. (NYSE:LNG), KeyCorp (NYSE:KEY), and United Microelectronics Corp (NYSE:UMC). This group of stocks’ market valuations resemble MTB’s market valuation.
|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 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $853 million. That figure was $504 million in MTB’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand United Microelectronics Corp (NYSE:UMC) is the least popular one with only 11 bullish hedge fund positions. M&T Bank Corporation (NYSE:MTB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTB is 65.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on MTB as the stock returned 35.6% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.