Where Do Hedge Funds Stand On The Bank of Nova Scotia (BNS)?

With the first-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 second quarter of 2021. One of these stocks was The Bank of Nova Scotia (NYSE:BNS).

Hedge fund interest in The Bank of Nova Scotia (NYSE:BNS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that BNS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare BNS to other stocks including China Petroleum & Chemical Corp (NYSE:SNP), FedEx Corporation (NYSE:FDX), and Zoetis Inc (NYSE:ZTS) to get a better sense of its popularity.

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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. Keeping this in mind let’s review the latest hedge fund action encompassing The Bank of Nova Scotia (NYSE:BNS).

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

At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BNS over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BNS A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors has the most valuable position in The Bank of Nova Scotia (NYSE:BNS), worth close to $94.3 million, accounting for 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Galibier Capital Management, managed by Joseph Sirdevan, which holds a $32.3 million position; 4.8% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish comprise Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Galibier Capital Management allocated the biggest weight to The Bank of Nova Scotia (NYSE:BNS), around 4.85% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, dishing out 1.15 percent of its 13F equity portfolio to BNS.

Judging by the fact that The Bank of Nova Scotia (NYSE:BNS) has witnessed falling interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers that decided to sell off their full holdings heading into Q2. At the top of the heap, Eric Sprott’s Sprott Asset Management sold off the largest investment of all the hedgies tracked by Insider Monkey, worth close to $65.8 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also cut its stock, about $2.9 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to The Bank of Nova Scotia (NYSE:BNS). We will take a look at China Petroleum & Chemical Corp (NYSE:SNP), FedEx Corporation (NYSE:FDX), Zoetis Inc (NYSE:ZTS), Crown Castle International Corp. (NYSE:CCI), PNC Financial Services Group Inc. (NYSE:PNC), Duke Energy Corporation (NYSE:DUK), and Enbridge Inc (NYSE:ENB). This group of stocks’ market values are closest to BNS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNP 11 210183 -2
FDX 63 2263772 0
ZTS 58 3124680 -3
CCI 43 1995629 3
PNC 39 418919 4
DUK 34 602208 -4
ENB 22 144689 -6
Average 38.6 1251440 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $1251 million. That figure was $240 million in BNS’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 11 bullish hedge fund positions. The Bank of Nova Scotia (NYSE:BNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BNS is 42.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately BNS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BNS investors were disappointed as the stock returned 1.9% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

Follow Bank Of Nova Scotia (NYSE:BNS)

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Disclosure: None. This article was originally published at Insider Monkey.