Were Hedge Funds Right About Piling Into American Express Company?

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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. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. What do these smart investors think about American Express Company (NYSE:AXP)?

Is American Express Company ready to rally soon? The best stock pickers were turning bullish. The number of bullish hedge fund positions rose by 12 in recent months. American Express Company was in 60 hedge funds’ portfolios at the end of December. The all-time high for this statistic was previously 58. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AXP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Let’s take a gander at the recent hedge fund action encompassing American Express Company.

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

At the end of December, a total of 60 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the third quarter of 2020. By comparison, 58 hedge funds held shares or bullish call options in AXP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AXP A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the most valuable position in American Express Company, worth close to $18.3312 billion, amounting to 6.8% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Fisher of Fisher Asset Management, with a $1.8115 billion position; 1.4% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism comprise Andreas Halvorsen’s Viking Global, Eashwar Krishnan’s Tybourne Capital Management and Mario Gabelli’s GAMCO Investors. In terms of the portfolio weights assigned to each position Aquamarine Capital Management allocated the biggest weight to American Express Company, around 14.81% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, setting aside 7.57 percent of its 13F equity portfolio to AXP.

With a general bullishness amongst the heavyweights, some big names have jumped into American Express Company headfirst. Theleme Partners, managed by Patrick Degorce, assembled the most outsized position in American Express Company. Theleme Partners had $110.9 million invested in the company at the end of the quarter. James Parsons’s Junto Capital Management also initiated a $31.9 million position during the quarter. The other funds with brand new AXP positions are Peter Seuss’s Prana Capital Management, Dipak Patel’s Alight Capital, and Leonard Green’s Leonard Green & Partners.

Let’s also examine hedge fund activity in other stocks similar to American Express Company. These stocks are Zoom Video Communications, Inc. (Nasdaq:ZM), The Estee Lauder Companies Inc (NYSE:EL), Intuitive Surgical, Inc. (Nasdaq:ISRG), General Electric Company (NYSE:GE), Rio Tinto Group (NYSE:RIO), Diageo plc (NYSE:DEO), and GlaxoSmithKline plc (NYSE:GSK). This group of stocks’ market caps are similar to AXP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZM 59 6002261 3
EL 51 3593398 5
ISRG 49 1802145 -1
GE 69 5684620 24
RIO 26 1711997 3
DEO 23 667041 4
GSK 30 1742036 -1
Average 43.9 3029071 5.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.9 hedge funds with bullish positions and the average amount invested in these stocks was $3029 million. That figure was $21887 million in AXP’s case. General Electric Company is the most popular stock in this table. On the other hand Diageo plc is the least popular one with only 23 bullish hedge fund positions. American Express Company is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AXP is 80.2. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on AXP as the stock returned 27.7% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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