With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Copa Holdings, S.A. (NYSE:CPA).
Is Copa Holdings, S.A. (NYSE:CPA) ready to rally soon? The best stock pickers are turning bullish. The number of bullish hedge fund bets inched up by 2 lately. Our calculations also showed that CPA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CPA was in 18 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with CPA positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ric Dillon of Diamond Hill Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action encompassing Copa Holdings, S.A. (NYSE:CPA).
What does smart money think about Copa Holdings, S.A. (NYSE:CPA)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CPA over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the largest position in Copa Holdings, S.A. (NYSE:CPA). Renaissance Technologies has a $124.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Driehaus Capital, managed by Richard Driehaus, which holds a $38.4 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of Israel Englander’s Millennium Management, Steve Cohen’s Point72 Asset Management and Ric Dillon’s Diamond Hill Capital. In terms of the portfolio weights assigned to each position Prince Street Capital Management allocated the biggest weight to Copa Holdings, S.A. (NYSE:CPA), around 5.2% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, dishing out 3.64 percent of its 13F equity portfolio to CPA.
As industrywide interest jumped, key hedge funds have jumped into Copa Holdings, S.A. (NYSE:CPA) headfirst. Albar Capital, managed by Javier Velazquez, established the largest position in Copa Holdings, S.A. (NYSE:CPA). Albar Capital had $7.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $2 million investment in the stock during the quarter. The other funds with brand new CPA positions are Sander Gerber’s Hudson Bay Capital Management, Donald Sussman’s Paloma Partners, and Minhua Zhang’s Weld Capital Management.
Let’s go over hedge fund activity in other stocks similar to Copa Holdings, S.A. (NYSE:CPA). These stocks are RLI Corp. (NYSE:RLI), PNM Resources, Inc. (NYSE:PNM), The Brink’s Company (NYSE:BCO), and Valvoline Inc. (NYSE:VVV). This group of stocks’ market values are similar to CPA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RLI | 14 | 184377 | -1 |
| PNM | 14 | 413235 | 1 |
| BCO | 20 | 515286 | -7 |
| VVV | 26 | 333444 | 4 |
| Average | 18.5 | 361586 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $362 million. That figure was $284 million in CPA’s case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 14 bullish hedge fund positions. Copa Holdings, S.A. (NYSE:CPA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on CPA, though not to the same extent, as the stock returned 6.2% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
