The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Truist Financial Corporation (NYSE:TFC) and determine whether the smart money was really smart about this stock.
Is Truist Financial Corporation (NYSE:TFC) worth your attention right now? Prominent investors were reducing their bets on the stock. The number of long hedge fund positions were cut by 1 in recent months. Truist Financial Corporation (NYSE:TFC) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 45. Our calculations also showed that TFC 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are viewed as worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at present, We look at the upper echelon of this group, around 850 funds. These hedge fund managers orchestrate most of the smart money’s total asset base, and by tailing their first-class picks, Insider Monkey has identified various investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum 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 .
Clint Carlson of Carlson Capital
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. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. 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 take a gander at the recent hedge fund action regarding Truist Financial Corporation (NYSE:TFC).
Hedge fund activity in Truist Financial Corporation (NYSE:TFC)
At Q2’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TFC over the last 20 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.
More specifically, Citadel Investment Group was the largest shareholder of Truist Financial Corporation (NYSE:TFC), with a stake worth $52.9 million reported as of the end of September. Trailing Citadel Investment Group was Adage Capital Management, which amassed a stake valued at $45.8 million. Carlson Capital, Gillson Capital, 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 Gillson Capital allocated the biggest weight to Truist Financial Corporation (NYSE:TFC), around 4.85% of its 13F portfolio. Soapstone Capital is also relatively very bullish on the stock, earmarking 2.16 percent of its 13F equity portfolio to TFC.
Seeing as Truist Financial Corporation (NYSE:TFC) has experienced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of hedgies that slashed their positions entirely last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling about $41 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also said goodbye to its stock, about $27.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Truist Financial Corporation (NYSE:TFC) but similarly valued. We will take a look at CNOOC Limited (NYSE:CEO), Boston Scientific Corporation (NYSE:BSX), Intercontinental Exchange Inc (NYSE:ICE), The Bank of Nova Scotia (NYSE:BNS), Newmont Corporation (NYSE:NEM), Deere & Company (NYSE:DE), and Mercadolibre Inc (NASDAQ:MELI). This group of stocks’ market values are similar to TFC’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CEO,13,166646,2 BSX,66,2312667,7 ICE,60,2754652,-1 BNS,13,252173,1 NEM,55,2418239,12 DE,32,839882,-12 MELI,60,4427510,0 Average,42.7,1881681,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.7 hedge funds with bullish positions and the average amount invested in these stocks was $1882 million. That figure was $288 million in TFC’s case. Boston Scientific Corporation (NYSE:BSX) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 13 bullish hedge fund positions. Truist Financial Corporation (NYSE:TFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TFC is 44.9. 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 33% in 2020 through the end of August and surpassed the market by 23.2 percentage points. Unfortunately TFC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); TFC investors were disappointed as the stock returned 4.5% 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.