Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA).
Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) has seen an increase in hedge fund sentiment recently. BBVA was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. There were 7 hedge funds in our database with BBVA positions at the end of the previous quarter. Our calculations also showed that BBVA 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.
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.
Dmitry Balyasny of Balyasny Asset Managemnet
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. Let’s take a gander at the recent hedge fund action regarding Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA).
What have hedge funds been doing with Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the second quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in BBVA a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), worth close to $270.2 million, comprising 0.3% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $2.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, Claes Fornell’s CSat Investment Advisory and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Fisher Asset Management allocated the biggest weight to Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), around 0.3% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, dishing out 0.25 percent of its 13F equity portfolio to BBVA.
With a general bullishness amongst the heavyweights, key money managers have jumped into Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA). Balyasny Asset Management had $0.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter. The other funds with brand new BBVA positions are Matthew Hulsizer’s PEAK6 Capital Management and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s check out hedge fund activity in other stocks similar to Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA). These stocks are Humana Inc (NYSE:HUM), Yum! Brands, Inc. (NYSE:YUM), Energy Transfer L.P. (NYSE:ET), and The Kraft Heinz Company (NASDAQ:KHC). This group of stocks’ market caps match BBVA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HUM | 61 | 3527353 | -1 |
| YUM | 35 | 842106 | 5 |
| ET | 30 | 623109 | 1 |
| KHC | 36 | 9572927 | 2 |
| Average | 40.5 | 3641374 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.5 hedge funds with bullish positions and the average amount invested in these stocks was $3641 million. That figure was $276 million in BBVA’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Energy Transfer L.P. (NYSE:ET) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is even less popular than ET. Hedge funds dodged a bullet by taking a bearish stance towards BBVA. 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 BBVA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BBVA investors were disappointed as the stock returned 2.8% 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.
