While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Popular Inc (NASDAQ:BPOP).
Is Popular Inc (NASDAQ:BPOP) a good investment today? The best stock pickers are betting on the stock. The number of long hedge fund positions increased by 1 in recent months. Our calculations also showed that bpop isn’t among the 30 most popular stocks among hedge funds. BPOP was in 28 hedge funds’ portfolios at the end of the third quarter of 2018. There were 27 hedge funds in our database with BPOP positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to go over the key hedge fund action surrounding Popular Inc (NASDAQ:BPOP).
How are hedge funds trading Popular Inc (NASDAQ:BPOP)?
At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BPOP over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the largest position in Popular Inc (NASDAQ:BPOP). AQR Capital Management has a $119.5 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Ric Dillon of Diamond Hill Capital, with a $92.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Clint Carlson’s Carlson Capital, Ken Griffin’s Citadel Investment Group and Steve Cohen’s Point72 Asset Management.
As one would reasonably expect, key money managers were breaking ground themselves. Prince Street Capital Management, managed by David Halpert, initiated the largest position in Popular Inc (NASDAQ:BPOP). Prince Street Capital Management had $5.3 million invested in the company at the end of the quarter. James Dondero’s Highland Capital Management also initiated a $1.5 million position during the quarter. The following funds were also among the new BPOP investors: Jeffrey Talpins’s Element Capital Management and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Popular Inc (NASDAQ:BPOP) but similarly valued. We will take a look at Bruker Corporation (NASDAQ:BRKR), Inogen Inc (NASDAQ:INGN), Kemper Corporation (NYSE:KMPR), and Oshkosh Corporation (NYSE:OSK). This group of stocks’ market values are similar to BPOP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRKR | 24 | 250368 | -2 |
| INGN | 21 | 282998 | 4 |
| KMPR | 14 | 113382 | 5 |
| OSK | 30 | 448412 | 10 |
| Average | 22.25 | 273790 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $786 million in BPOP’s case. Oshkosh Corporation (NYSE:OSK) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 14 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 OSK might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
