In this article, we cover the investing activities of the world's largest money managers or mega funds in money center and foreign bank stocks, based on our research of the latest available institutional 13-F filings. These mega fund managers, managing between $50 billion and over $700 billion in 13-F assets, 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. Taken together, they are bearish on the money center and foreign banks group, cutting a net $3.97 billion in Q4 from their $278.33 billion prior quarter holdings in the group.
The following are the money center and foreign bank stocks that these mega fund managers are most bullish about (see Table):
Royal Bank of Canada (RY): RY is a worldwide provider of personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services. A total of 22 mega funds hold 8.9% of the outstanding shares, with eleven funds buying and four selling during the quarter. Also, together mega funds added a net $448 million in Q4 to their $6.57 billion prior quarter position in the company. The top buyer was mutual fund powerhouse Fidelity Investments ($225 million).
RY shares are currently up 8% YTD, and it currently trades at 10-11 forward P/E and 2.2 P/B compared to averages of 9.8 and 1.2 for its peers foreign banks, while earnings are projected to increase from $4.44 in 2011 to $5.29 in 2013 at a respectable annual rate of 9.2%. The bank was recently included, ranked at no.6, in Bloomberg's list of the world's strongest banks.
The Toronto-Dominion Bank (TD): TD is a Canadian chartered bank that provides a wide range of business and consumer financial and banking services in North America and Internationally. A total of 22 mega funds hold 17.7% of the outstanding shares, with fifteen funds buying and three selling during the quarter. Also, together mega funds added a net $169 million in Q4 to their $12.55 billion prior quarter position in the company. The top buyer was New York-based mega fund AllianceBernstein ($50 million), and the top holders were Royal Bank of Canada ($6.31 billion) and Fidelity Investments ($2.88 billion).
TD shares are currently up 9% YTD, and they currently trade at 10-11 forward P/E and 1.8 P/B compared to averages of 9.8 and 1.2 for its peers foreign banks, while earnings are projected to increase from $6.73 in 2011 to $8.00 in 2013 at a respectable annual rate of 9.0%. TD, ranked at no. 4 along with RY above-- as well as a number of other Canadian banks-- were included in Bloomberg's list of the world's strongest banks.
Besides the above two, mega funds also accumulated shares in Sao Paulo, Brazil-based Itau Unibanco Holding SA (ITUB), that provides various commercial, corporate, and investment banking services to individuals, and small and middle-market companies in Brazil and internationally via over 4,900 full service branches and customer service outlets worldwide. During Q4, mega funds together added a net $52 million to their $3.81 billion prior quarter position in the company.
Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following money center and foreign bank stocks (see Table):
- Bank of America (BAC), that is a global financial services company providing banking and financial services to individuals, small- and middle-market businesses, corporations and governments primarily in the U.S., and also internationally in over 40 foreign countries, in which mega funds together cut a net $1.68 billion in Q4 from their $24.65 billion prior quarter position in the company;
- Wells Fargo & Company (WFC) is a diversified financial services holding company with 9,000 offices primarily in the U.S., and provides retail, commercial and corporate banking services, in which mega funds together cut a net $1.30 billion in Q4 from their $61.75 billion prior quarter position in the company;
- Goldman Sachs Group Inc. (GS), the world's leading investment bank that provides investment banking, securities and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide, in which mega funds together cut a net $781 million in Q4 from their $21.52 billion prior quarter position in the company;
- JP Morgan Chase & Co. (JPM), that is a global financial company providing private, commercial, and investment banking and treasury services in over 60 countries, in which mega funds together cut a net $653 million in Q4 from their $58.10 billion prior quarter position in the company;
- Citigroup Inc. (C), a global financial services company providing consumers, corporations, governments and institutions with a range of financial products and services, including banking, investment, insurance and credit card and other services in more than 160 countries, in which mega funds together cut a net $360 million in Q4 from their $30.10 billion prior quarter position in the company;
- Banco Santander SA (STD), a global holding company for Banco Santander and other banks providing a wide range of banking and financial products via operating over 14,000 branches in Europe, Latin America, U.K. and U.S., in which mega funds together cut a net $203 million in Q4 from their $504 million prior quarter position in the company; and
- Banco Bradesco SA (BBD), a Brazilian bank providing a range of banking and insurance products services to individuals as well as corporations, and that operates a network of branches, ATMs, and special banking service stations and outlets in Brazil, and it also operates three branches and eight subsidiaries in New York, London, the Cayman Islands, Japan, Hong Kong, Argentina, Mexico, and Luxembourg, in which mega funds together cut a net $98 million in Q4 from their $2.48 billion prior quarter position in the company.
This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.
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.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.