Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Popular Inc (NASDAQ:BPOP).
Is Popular Inc (NASDAQ:BPOP) a buy here? Money managers are becoming less confident. The number of bullish hedge fund positions fell by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Microsemi Corporation (NASDAQ:MSCC), Whiting Petroleum Corp (NYSE:WLL), and Nabors Industries Ltd. (NYSE:NBR) to gather more data points.
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Keeping this in mind, let’s take a look at the fresh action encompassing Popular Inc (NASDAQ:BPOP).
How have hedgies been trading Popular Inc (NASDAQ:BPOP)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the biggest position in Popular Inc (NASDAQ:BPOP), worth close to $184 million, comprising 0.2% of its total 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $64.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism include John Khoury’s Long Pond Capital, Clint Carlson’s Carlson Capital and Porter Collins, Daniel Moses, and Vincent Daniel’s Seawolf Capital.
Judging by the fact that Popular Inc (NASDAQ:BPOP) has witnessed a declination in interest from hedge fund managers, it’s safe to say that there were a few hedgies that slashed their positions entirely last quarter. At the top of the heap, Peter Muller’s PDT Partners sold off the largest stake of all the hedgies followed by Insider Monkey, totaling an estimated $6.3 million in stock. Jim Simons’s fund, Renaissance Technologies, also sold off its stock, about $4.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). These stocks are Microsemi Corporation (NASDAQ:MSCC), Whiting Petroleum Corp (NYSE:WLL), Nabors Industries Ltd. (NYSE:NBR), and Tallgrass Energy GP LP (NYSE:TEGP). This group of stocks’ market valuations match BPOP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSCC | 12 | 82075 | -9 |
| WLL | 42 | 767203 | -11 |
| NBR | 22 | 229973 | -4 |
| TEGP | 10 | 56213 | 1 |
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $709 million in BPOP’s case. Whiting Petroleum Corp (NYSE:WLL) is the most popular stock in this table. On the other hand Tallgrass Energy GP LP (NYSE:TEGP) is the least popular one with only 10 bullish hedge fund positions. Popular Inc (NASDAQ:BPOP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WLL might be a better candidate to consider a long position.
