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Regional banks, as represented by the SPDR S&P Regional Banking ETF (NYSEARCA:KRE), are up about 15% YTD, compared to the 10% rise in the broader markets as represented by the S&P 500 index. In this article, via an analysis based on the latest available Q4 institutional 13-F filings, we identify the regional and super-regional banks that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets.

Taken together these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are slightly bullish on the regional banking group, cumulatively adding $124 million in Q4 to their $139.96 billion prior quarter position (for more general information on these mega funds, please look at the end of the article).

The following are the regional and super-regional banks that these mega fund managers are most bullish about, that are also trading at a discount to the peers in their group, and that also have a high dividend yield relative to their peers (see Table):

People's United Financial (NASDAQ:PBCT): PBCT is a bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate and municipal customers. Mega funds together added a net $61 million in Q4 to their $1.39 billion prior quarter position in the company, and taken together mega funds hold 32.4% of the outstanding shares. The top buyer was Denver, CO-based mutual fund powerhouse Janus Capital Management, with $86.0 billion in 13-F assets ($62 million), and the top holder was mega fund Vanguard Group, with $1.6 trillion in assets under management ($245 million).

PBCT has a dividend yield of 5.2% versus the 1.7% average for its peers, and it also trades at a discount 13-14 forward P/E and 0.8 P/B versus averages of 18.3 and 0.8 for its peers in the savings and loan group.

Hudson City Bancorp Inc. (NASDAQ:HCBK): HCBK is a holding company for Hudson City Savings Bank operating via 135 branches in NJ, NY and CT. Mega funds together added a net $56 million in Q4 to their $1.11 billion prior quarter position in the company, and taken together mega funds hold 31.6% of the outstanding shares. The top buyer was mega fund State Street Corp., with $565 billion in 13-F assets ($36 million), and top holder was Los Angeles-based mega fund Capital Research Global Investors, with over $223 billion in 13-F assets ($340 million).

HCBK has a dividend yield of 4.8% versus the 1.6% average for its peers in the saving and loan group, and it also trades at discount 12 forward P/E and 0.7 P/B versus averages of 17.7 and 0.8 for its peers in the group.

Huntington Bancshares Inc. (NASDAQ:HBAN): HBAN operates as the holding company for the Huntington National Bank that provides commercial and consumer banking services via 611 offices in Ohio, Michigan, Pennsylvania, Indiana, West Virginia, Kentucky and Florida. Mega funds together added a net $77 million in Q4 to their $2.06 billion prior quarter position in the company, and taken together mega funds hold 37.0% of the outstanding shares. The top buyer was mega fund mega fund Wellington Management, with $254 billion in 13-F assets ($138 million), and the top holder was mutual fund powerhouse Fidelity Investments, with $492 billion in 13-F assets ($459 million).

HBAN just released its Q1 last Wednesday, in which it beat analyst earnings estimates (17c v/s 14c). The company also revealed in its earnings conference call later that morning that it was seeking acquisitions in the $500 million to $2.5 billion range, and that it was evaluating dividend and stock buyback options. Its shares currently trade at a discount 10 forward P/E and 1.1 P/B compared with the averages of 13.5 and 0.8 for Midwestern banks, while earnings are projected to increase modestly from 60c in 2011 to 66c in 2013. Also, it has a dividend yield of 2.5% versus the 1.6% average for its peers.

The following are some additional regional and super-regional banks that mega funds accumulated in Q4 (see Table):

  • Regions Financial Corp. (NYSE:RF), a holding company for Regions Bank that provides a range of commercial, retail and mortgage banking services in the U.S. via 1,772 offices in 16 states in the South and the Midwest, in which mega funds together added a net $428 million in Q4 to their $2.38 billion prior quarter position in the company; and
  • TCF Financial Corp. (NYSE:TCB), a bank holding company for TCF National Bank that provides various retail and commercial banking products and services via over 400 branch locations in IL, MN, MI, CO, WI, AZ, IN and SD, in which mega funds together added a net $64 million in Q4 to their $687 million prior quarter position in the company.

Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following regional and super-regional banking stocks (see Table):

  • PNC Financial Services Group (NYSE:PNC), that operates as a diversified financial services company, offering retail banking, corporate and institutional banking, asset management and residential mortgage banking services, via 2,470 branches in PA, NJ, DE, Washington D.C., and 10 other states, in which mega funds together cut a net $650 million in Q4 from their $13.40 billion prior quarter position in the company;
  • BB&T Corp. (NYSE:BBT), that operates as a financial holding company for Branch Banking and Trust Company, which provides banking and trust services to individuals and businesses via over 1,700 offices in 12 states and Washington, D.C., in which mega funds together cut a net $265 million in Q4 from their $6.91 billion prior quarter position in the company;
  • SunTrust Banks Inc. (NYSE:STI), that is a holding company for SunTrust Bank, which provides traditional deposit and credit services, as well as trust and investment services via 1,668 offices in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and Washington, D.C., in which mega funds together cut a net $189 million in Q4 from their $5.26 billion prior quarter position in the company;
  • US Bancorp (NYSE:USB), that is a super-regional financial services holding company, operating full-service branch offices and ATMs, and providing a full range of banking and financial services including brokerage, insurance, investment, mortgage, trust and payment services to individuals, institutions and corporations, in which mega funds together cut a net $133 million in Q4 from their $19.39 billion prior quarter position in the company;
  • KeyCorp (NYSE:KEY), that operates as a holding company for KeyBank National Association that provides various investment management, retail and commercial banking, consumer finance, and investment banking products to corporate, individual and institutional clients via 1,033 branches in 14 states, in which mega funds together cut a net $69 million in Q4 from their $2.27 billion prior quarter position in the company;
  • Synovus Financial Corp. (NYSE:SNV), is a holding company with 30 first and second tier banking subsidiaries operating via 323 offices in GA, AL, FL, SC and TN, in which mega funds together cut a net $31 million in Q4 from their $419 million prior quarter position in the company; and
  • Fifth Third Bancorp (NASDAQ:FITB), a diversified financial services' holding company, engaged in commercial, retail and trust banking, data processing services, investment advisory services and leasing activities via 1,312 centers in 12 states, in which mega funds together cut a net $27 million in Q4 from their $4.90 billion prior quarter position in the company.

Table

(click to enlarge)

Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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