There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Popular Inc (NASDAQ:BPOP) .
Is Popular Inc (NASDAQ:BPOP) a bargain? The smart money is indeed betting on the stock. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings rose by 3 lately. BPOPwas in 30 hedge funds’ portfolios at the end of September. There were 27 hedge funds in our database with BPOP positions at the end of the previous quarter. At the end of this article we will also compare BPOP to other stocks including CalAtlantic Group Inc (NYSE:CAA), Columbia Sportswear Company (NASDAQ:COLM), and Healthcare Realty Trust Inc (NYSE:HR) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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With all of this in mind, we’re going to take a gander at the key action regarding Popular Inc (NASDAQ:BPOP).
What does the smart money think about Popular Inc (NASDAQ:BPOP)?
Heading into the fourth quarter of 2016, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, up 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BPOP over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the number one position in Popular Inc (NASDAQ:BPOP), worth close to $175.4 million, comprising 1.1% of its total 13F portfolio. Coming in second is Polaris Capital Management, led by Bernard Horn, holding an $85.2 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise John Armitage’s Egerton Capital Limited, Cliff Asness’s AQR Capital Management and Pasco Alfaro / Richard Tumure’s Miura Global Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names were breaking ground themselves. Polaris Capital Management, led by Bernard Horn, established the biggest position in Popular Inc (NASDAQ:BPOP). John Armitage’s Egerton Capital Limited also made a $73.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Pasco Alfaro / Richard Tumure’s Miura Global Management, Anand Parekh’s Alyeska Investment Group, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). These stocks are CalAtlantic Group Inc (NYSE:CAA), Columbia Sportswear Company (NASDAQ:COLM), Healthcare Realty Trust Inc (NYSE:HR), and IDACORP Inc (NYSE:IDA). All of these stocks’ market caps are similar to BPOP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAA | 36 | 630105 | 3 |
| COLM | 17 | 107668 | -3 |
| HR | 6 | 103017 | -5 |
| IDA | 6 | 96192 | -4 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $587 million in BPOP’s case. CalAtlantic Group Inc (NYSE:CAA) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 6 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. In this regard CAA might be a better candidate to consider taking a long position in.
Disclosure: none.
