The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Popular Inc (NASDAQ:BPOP) from the perspective of those elite funds.
Popular Inc (NASDAQ:BPOP) was in 32 hedge funds’ portfolios at the end of December. BPOP has experienced an increase in enthusiasm from smart money lately. There were 28 hedge funds in our database with BPOP positions at the end of the previous quarter. Our calculations also showed that bpop isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the fresh hedge fund action surrounding Popular Inc (NASDAQ:BPOP).
What does the smart money think about Popular Inc (NASDAQ:BPOP)?
Heading into the first quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BPOP over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Polaris Capital Management was the largest shareholder of Popular Inc (NASDAQ:BPOP), with a stake worth $197.7 million reported as of the end of September. Trailing Polaris Capital Management was AQR Capital Management, which amassed a stake valued at $143.9 million. Citadel Investment Group, Millennium Management, and Diamond Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, specific money managers have jumped into Popular Inc (NASDAQ:BPOP) headfirst. Polaris Capital Management, managed by Bernard Horn, created the most valuable position in Popular Inc (NASDAQ:BPOP). Polaris Capital Management had $197.7 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $4.3 million position during the quarter. The other funds with brand new BPOP positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Sander Gerber’s Hudson Bay Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). We will take a look at Polaris Industries Inc. (NYSE:PII), Xerox Corporation (NYSE:XRX), ICU Medical, Inc. (NASDAQ:ICUI), and NewMarket Corporation (NYSE:NEU). All of these stocks’ market caps match BPOP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PII | 15 | 113485 | -2 |
| XRX | 44 | 888811 | 7 |
| ICUI | 20 | 327916 | -15 |
| NEU | 16 | 64634 | 3 |
| Average | 23.75 | 348712 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $349 million. That figure was $804 million in BPOP’s case. Xerox Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand Polaris Industries Inc. (NYSE:PII) is the least popular one with only 15 bullish hedge fund positions. Popular Inc (NASDAQ:BPOP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately BPOP wasn’t in this group. Hedge funds that bet on BPOP were disappointed as the stock returned 14.6% and underperformed the market by a small margin. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
