Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Hedge fund interest in Credicorp Ltd. (NYSE:BAP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BAP to other stocks including Textron Inc. (NYSE:TXT), SK Telecom Co., Ltd. (NYSE:SKM), and Laboratory Corp. of America Holdings (NYSE:LH) to get a better sense of its popularity.
To the average investor there are plenty of gauges investors use to assess stocks. A duo of the most under-the-radar gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best fund managers can outclass the S&P 500 by a solid amount (see the details here).
We’re going to take a look at the new hedge fund action regarding Credicorp Ltd. (NYSE:BAP).
How are hedge funds trading Credicorp Ltd. (NYSE:BAP)?
Heading into the fourth quarter of 2018, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in BAP over the last 13 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Credicorp Ltd. (NYSE:BAP) was held by Generation Investment Management, which reported holding $345.5 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $276.1 million position. Other investors bullish on the company included AQR Capital Management, Arrowstreet Capital, and Driehaus Capital.
Due to the fact that Credicorp Ltd. (NYSE:BAP) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Matthew Tewksbury’s Stevens Capital Management dumped the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $3.8 million in stock. Michael Platt and William Reeves’s fund, BlueCrest Capital Mgmt., also dropped its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Credicorp Ltd. (NYSE:BAP). These stocks are Textron Inc. (NYSE:TXT), SK Telecom Co., Ltd. (NYSE:SKM), Laboratory Corp. of America Holdings (NYSE:LH), and Splunk Inc (NASDAQ:SPLK). This group of stocks’ market valuations are closest to BAP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TXT | 26 | 596915 | 1 |
| SKM | 5 | 40078 | -1 |
| LH | 40 | 1277379 | 7 |
| SPLK | 39 | 900559 | 4 |
| Average | 27.5 | 703733 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $704 million. That figure was $824 million in BAP’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 5 bullish hedge fund positions. Credicorp Ltd. (NYSE:BAP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LH might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
