It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Total Return Index ETFs returned approximately 27.5% in 2019 (through the end of November). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same 11-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Compania de Minas Buenaventura SA (NYSE:BVN).
Compania de Minas Buenaventura SA (NYSE:BVN) was in 6 hedge funds’ portfolios at the end of September. BVN shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 7 hedge funds in our database with BVN holdings at the end of the previous quarter. Our calculations also showed that BVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are viewed as underperforming, old investment tools of the past. While there are over 8000 funds with their doors open at present, Our experts choose to focus on the crème de la crème of this club, about 750 funds. These hedge fund managers preside over the lion’s share of the hedge fund industry’s total asset base, and by shadowing their highest performing stock picks, Insider Monkey has found a few investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s view the key hedge fund action regarding Compania de Minas Buenaventura SA (NYSE:BVN).
What have hedge funds been doing with Compania de Minas Buenaventura SA (NYSE:BVN)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in BVN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Compania de Minas Buenaventura SA (NYSE:BVN), with a stake worth $5.9 million reported as of the end of September. Trailing Arrowstreet Capital was Sprott Asset Management, which amassed a stake valued at $3.1 million. PDT Partners, Winton Capital Management, and AQR Capital Management 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 Sprott Asset Management allocated the biggest weight to Compania de Minas Buenaventura SA (NYSE:BVN), around 0.79% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, designating 0.16 percent of its 13F equity portfolio to BVN.
Because Compania de Minas Buenaventura SA (NYSE:BVN) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that decided to sell off their entire stakes last quarter. Interestingly, David Halpert’s Prince Street Capital Management dropped the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $6.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dropped its stock, about $1.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Compania de Minas Buenaventura SA (NYSE:BVN). We will take a look at United Bankshares, Inc. (NASDAQ:UBSI), Echostar Corporation (NASDAQ:SATS), Schneider National, Inc. (NYSE:SNDR), and Adeptus Health Inc (NYSE:ADPT). All of these stocks’ market caps are closest to BVN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UBSI | 10 | 24052 | -4 |
| SATS | 29 | 601864 | 1 |
| SNDR | 17 | 127932 | -4 |
| ADPT | 21 | 2018148 | -17 |
| Average | 19.25 | 692999 | -6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $693 million. That figure was $14 million in BVN’s case. Echostar Corporation (NASDAQ:SATS) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Compania de Minas Buenaventura SA (NYSE:BVN) is even less popular than UBSI. Hedge funds dodged a bullet by taking a bearish stance towards BVN. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BVN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BVN investors were disappointed as the stock returned 1.4% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
