After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Popular Inc (NASDAQ:BPOP).
Popular Inc (NASDAQ:BPOP) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 33 hedge funds’ portfolios at the end of September. Our calculations also showed that BPOP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Royal Gold, Inc (NASDAQ:RGLD), The Boston Beer Company Inc (NYSE:SAM), and Teradata Corporation (NYSE:TDC) to gather more data points.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the new hedge fund action surrounding Popular Inc (NASDAQ:BPOP).
Do Hedge Funds Think BPOP Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BPOP over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Polaris Capital Management was the largest shareholder of Popular Inc (NASDAQ:BPOP), with a stake worth $260 million reported as of the end of September. Trailing Polaris Capital Management was AQR Capital Management, which amassed a stake valued at $93.9 million. Citadel Investment Group, Basswood Capital, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Arctis Global allocated the biggest weight to Popular Inc (NASDAQ:BPOP), around 9.36% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 8.29 percent of its 13F equity portfolio to BPOP.
Seeing as Popular Inc (NASDAQ:BPOP) has faced declining sentiment from the smart money, logic holds that there were a few hedge funds that decided to sell off their positions entirely by the end of the third quarter. It’s worth mentioning that David Rosen’s Rubric Capital Management cut the biggest investment of the 750 funds watched by Insider Monkey, comprising an estimated $27.3 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $9.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). We will take a look at Royal Gold, Inc (NASDAQ:RGLD), The Boston Beer Company Inc (NYSE:SAM), Teradata Corporation (NYSE:TDC), Stericycle Inc (NASDAQ:SRCL), TriNet Group Inc (NYSE:TNET), Performance Food Group Company (NYSE:PFGC), and Affiliated Managers Group, Inc. (NYSE:AMG). This group of stocks’ market caps resemble BPOP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RGLD | 21 | 168093 | 1 |
| SAM | 19 | 237876 | -23 |
| TDC | 28 | 583784 | 2 |
| SRCL | 17 | 516772 | -9 |
| TNET | 19 | 462214 | 1 |
| PFGC | 36 | 747258 | -5 |
| AMG | 30 | 753848 | 0 |
| Average | 24.3 | 495692 | -4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $496 million. That figure was $773 million in BPOP’s case. Performance Food Group Company (NYSE:PFGC) is the most popular stock in this table. On the other hand Stericycle Inc (NASDAQ:SRCL) is the least popular one with only 17 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. Our overall hedge fund sentiment score for BPOP is 75.4. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately BPOP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BPOP were disappointed as the stock returned 0.2% since the end of September (through 11/30) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
