Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards HP Inc. (NYSE:HPQ).
Is HPQ a good stock to buy? HP Inc. (NYSE:HPQ) shareholders have witnessed an increase in hedge fund sentiment of late. HP Inc. (NYSE:HPQ) was in 43 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 59. Our calculations also showed that HPQ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 let’s view the new hedge fund action encompassing HP Inc. (NYSE:HPQ).
Do Hedge Funds Think HPQ Is A Good Stock To Buy Now?
At Q1’s end, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HPQ over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in HP Inc. (NYSE:HPQ) was held by Arrowstreet Capital, which reported holding $533.4 million worth of stock at the end of December. It was followed by AQR Capital Management with a $285.3 million position. Other investors bullish on the company included D E Shaw, GLG Partners, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to HP Inc. (NYSE:HPQ), around 1.43% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, setting aside 1.37 percent of its 13F equity portfolio to HPQ.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in HP Inc. (NYSE:HPQ). Marshall Wace LLP had $24.3 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management also made a $6.4 million investment in the stock during the quarter. The following funds were also among the new HPQ investors: Jinghua Yan’s TwinBeech Capital, Mika Toikka’s AlphaCrest Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s also examine hedge fund activity in other stocks similar to HP Inc. (NYSE:HPQ). These stocks are Veeva Systems Inc (NYSE:VEEV), Amphenol Corporation (NYSE:APH), Trane Technologies plc (NYSE:TT), T. Rowe Price Group, Inc. (NASDAQ:TROW), Electronic Arts Inc. (NASDAQ:EA), Constellation Brands, Inc. (NYSE:STZ), and Agilent Technologies Inc. (NYSE:A). This group of stocks’ market values are similar to HPQ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VEEV | 39 | 966072 | 3 |
| APH | 42 | 1077461 | 1 |
| TT | 35 | 1092597 | 1 |
| TROW | 26 | 303927 | -9 |
| EA | 44 | 1430436 | -6 |
| STZ | 58 | 1231651 | 0 |
| A | 42 | 3464139 | -3 |
| Average | 40.9 | 1366612 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.9 hedge funds with bullish positions and the average amount invested in these stocks was $1367 million. That figure was $1526 million in HPQ’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 26 bullish hedge fund positions. HP Inc. (NYSE:HPQ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HPQ is 57.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately HPQ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HPQ were disappointed as the stock returned -9.1% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Hp Inc (NYSE:HPQ)
Follow Hp Inc (NYSE:HPQ)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- Top 10 Stocks to Buy Right Now
- 10 Best Stocks To Buy and Hold For 5 Years
Disclosure: None. This article was originally published at Insider Monkey.
