Should You Buy HP Inc. (HPQ)?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

HP Inc. (NYSE:HPQ) investors should be aware of an increase in support from the world’s most elite money managers of late. 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 Mizuho Financial Group Inc. (ADR) (NYSE:MFG), salesforce.com, inc. (NYSE:CRM), and PNC Financial Services (NYSE:PNC) to gather more data points.

To most stock holders, hedge funds are seen as underperforming, old investment tools of the past. While there are over 8000 funds trading at the moment, Our experts hone in on the moguls of this group, around 700 funds. These money managers administer the majority of all hedge funds’ total asset base, and by watching their finest picks, Insider Monkey has unearthed several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, we’re going to view the key action surrounding HP Inc. (NYSE:HPQ).

Hedge fund activity in HP Inc. (NYSE:HPQ)

Heading into Q4, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, up by 7% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the most valuable position in HP Inc. (NYSE:HPQ), worth close to $490.3 million, amounting to 3.1% of its total 13F portfolio. The second most bullish fund manager is David Cohen and Harold Levy of Iridian Asset Management, with a $261 million position; 2.2% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise Cliff Asness’s AQR Capital Management, Peter Adam Hochfelder’s Brahman Capital and Ken Griffin’s Citadel Investment Group.

As one would reasonably expect, specific money managers have been driving this bullishness. Brahman Capital, managed by Peter Adam Hochfelder, assembled the most outsized position in HP Inc. (NYSE:HPQ). The fund reportedly had $198.5 million invested in the company at the end of the quarter. Ahmet Okumus’s Okumus Fund Management also made a $114.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Rob Citrone’s Discovery Capital Management, Ryan Frick and Oliver Evans’s Dorsal Capital Management, and Howard Guberman’s Gruss Asset Management.

Let’s also examine hedge fund activity in other stocks similar to HP Inc. (NYSE:HPQ). These stocks are Mizuho Financial Group Inc. (ADR) (NYSE:MFG), salesforce.com, inc. (NYSE:CRM), PNC Financial Services (NYSE:PNC), and Canadian National Railway (USA) (NYSE:CNI). This group of stocks’ market caps match HPQ’s market cap.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1.07 billion. That figure was $3.07 billion in HPQ’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table, while Mizuho Financial Group Inc. (ADR) (NYSE:MFG) is the least popular one with only 6 bullish hedge fund positions. HP Inc. (NYSE:HPQ) steals the show with 59 long hedge fund positions and investments nearly three times the average. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.