The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of BHP Group (NYSE:BHP).
BHP Group (NYSE:BHP) has experienced a decrease in support from the world’s most elite money managers of late. Our calculations also showed that BHP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: 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’ 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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Michael Hintze of CQS Cayman LP
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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the fresh hedge fund action surrounding BHP Group (NYSE:BHP).
What does smart money think about BHP Group (NYSE:BHP)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the fourth quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in BHP a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in BHP Group (NYSE:BHP) was held by Fisher Asset Management, which reported holding $269.2 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $114.7 million position. Other investors bullish on the company included D E Shaw, Athos Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Athos Capital allocated the biggest weight to BHP Group (NYSE:BHP), around 12.13% of its 13F portfolio. Sensato Capital Management is also relatively very bullish on the stock, earmarking 3.04 percent of its 13F equity portfolio to BHP.
Due to the fact that BHP Group (NYSE:BHP) has witnessed bearish sentiment from hedge fund managers, we can see that there is a sect of funds that decided to sell off their positions entirely heading into Q4. It’s worth mentioning that Simon Sadler’s Segantii Capital dropped the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $43 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $6.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to BHP Group (NYSE:BHP). We will take a look at Linde plc (NYSE:LIN), Citigroup Inc. (NYSE:C), Royal Bank of Canada (NYSE:RY), and Anheuser-Busch InBev SA/NV (NYSE:BUD). This group of stocks’ market caps are similar to BHP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LIN | 53 | 3350656 | 6 |
| C | 86 | 5494249 | -12 |
| RY | 16 | 138801 | -4 |
| BUD | 17 | 877182 | -6 |
| Average | 43 | 2465222 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $2465 million. That figure was $461 million in BHP’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 bullish hedge fund positions. BHP Group (NYSE:BHP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on BHP as the stock returned 33.9% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
