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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Banco BBVA Argentina S.A. (NYSE:BBAR).
Is BBAR a good stock to buy? Banco BBVA Argentina S.A. (NYSE:BBAR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of March. Our calculations also showed that BBAR isn't among the 30 most popular stocks among hedge funds (click for Q1 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 Ennis, Inc. (NYSE:EBF), Agenus Inc (NASDAQ:AGEN), and IVERIC bio, Inc. (NASDAQ:ISEE) to gather more data points.
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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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. Keeping this in mind let's check out the key hedge fund action encompassing Banco BBVA Argentina S.A. (NYSE:BBAR).
Do Hedge Funds Think BBAR Is A Good Stock To Buy Now?
At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 8 hedge funds with a bullish position in BBAR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Banco BBVA Argentina S.A. (NYSE:BBAR). Arrowstreet Capital has a $1.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Donald Sussman of Paloma Partners, with a $1.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism comprise Ken Griffin's Citadel Investment Group, and Matthew Hulsizer's PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Paloma Partners allocated the biggest weight to Banco BBVA Argentina S.A. (NYSE:BBAR), around 0.03% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.002 percent of its 13F equity portfolio to BBAR.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Caxton Associates LP. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was PEAK6 Capital Management).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Banco BBVA Argentina S.A. (NYSE:BBAR) but similarly valued. These stocks are Ennis, Inc. (NYSE:EBF), Agenus Inc (NASDAQ:AGEN), IVERIC bio, Inc. (NASDAQ:ISEE), Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), Ares Commercial Real Estate Corp (NYSE:ACRE), AC Immune SA (NASDAQ:ACIU), and Marine Products Corp. (NYSE:MPX). This group of stocks' market values resemble BBAR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EBF,8,70320,0 AGEN,12,48916,1 ISEE,26,287014,-3 SOI,10,43941,-2 ACRE,14,42046,6 ACIU,13,93167,2 MPX,5,13660,1 Average,12.6,85581,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $3 million in BBAR's case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand Marine Products Corp. (NYSE:MPX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Banco BBVA Argentina S.A. (NYSE:BBAR) is even less popular than MPX. Our overall hedge fund sentiment score for BBAR is 13. 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. Hedge funds clearly dropped the ball on BBAR as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on BBAR as the stock returned 42.5% since Q1 (through June 11th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.