At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Shinhan Financial Group Co., Ltd. (NYSE:SHG) makes for a good investment right now.
Is Shinhan Financial Group Co., Ltd. (NYSE:SHG) a cheap investment right now? The smart money was becoming less hopeful. The number of bullish hedge fund bets fell by 1 recently. Shinhan Financial Group Co., Ltd. (NYSE:SHG) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that SHG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 7 hedge funds in our database with SHG holdings at the end of December.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Paul Marshall of Marshall Wace
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to view the key hedge fund action regarding Shinhan Financial Group Co., Ltd. (NYSE:SHG).
Do Hedge Funds Think SHG Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in SHG a year ago. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Pzena Investment Management held the most valuable stake in Shinhan Financial Group Co., Ltd. (NYSE:SHG), which was worth $23 million at the end of the fourth quarter. On the second spot was Arrowstreet Capital which amassed $4.6 million worth of shares. D E Shaw, Marshall Wace LLP, and ExodusPoint Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Shinhan Financial Group Co., Ltd. (NYSE:SHG), around 0.09% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to SHG.
Due to the fact that Shinhan Financial Group Co., Ltd. (NYSE:SHG) has experienced a decline in interest from the smart money, we can see that there is a sect of hedge funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Israel Englander’s Millennium Management cut the biggest position of all the hedgies watched by Insider Monkey, worth close to $2.4 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $0.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Shinhan Financial Group Co., Ltd. (NYSE:SHG) but similarly valued. We will take a look at NVR, Inc. (NYSE:NVR), Citrix Systems, Inc. (NASDAQ:CTXS), L Brands Inc (NYSE:LB), Insulet Corporation (NASDAQ:PODD), Tyler Technologies, Inc. (NYSE:TYL), TransUnion (NYSE:TRU), and Wheaton Precious Metals Corp. (NYSE:WPM). This group of stocks’ market values match SHG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVR | 39 | 1261359 | -7 |
| CTXS | 20 | 627946 | -9 |
| LB | 59 | 5930346 | 7 |
| PODD | 39 | 1556378 | -2 |
| TYL | 28 | 522802 | -4 |
| TRU | 41 | 2289853 | 0 |
| WPM | 28 | 439920 | -6 |
| Average | 36.3 | 1804086 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1804 million. That figure was $30 million in SHG’s case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Citrix Systems, Inc. (NASDAQ:CTXS) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Shinhan Financial Group Co., Ltd. (NYSE:SHG) is even less popular than CTXS. Our overall hedge fund sentiment score for SHG is 24. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on SHG, though not to the same extent, as the stock returned 10.1% since the end of March (through June 25th) and outperformed the market as well.
Follow Shinhan Financial Group Co Ltd (NYSE:SHG)
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Disclosure: None. This article was originally published at Insider Monkey.
