Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Banco Bradesco SA (NYSE:BBD).
Is Banco Bradesco SA (NYSE:BBD) a safe stock to buy now? Money managers were in an optimistic mood. The number of long hedge fund positions improved by 2 recently. Banco Bradesco SA (NYSE:BBD) was in 19 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. Our calculations also showed that BBD isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 17 hedge funds in our database with BBD positions at the end of the fourth quarter.
In the 21st century investor’s toolkit there are a lot of tools investors have at their disposal to evaluate their holdings. A duo of the less utilized tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Howard Marks of Oaktree Capital
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Do Hedge Funds Think BBD Is A Good Stock To Buy Now?
At first quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the fourth quarter of 2020. By comparison, 15 hedge funds held shares or bullish call options in BBD a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Banco Bradesco SA (NYSE:BBD) was held by Fisher Asset Management, which reported holding $115.2 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $14.3 million position. Other investors bullish on the company included Millennium Management, Rima Senvest Management, and Indus Capital. In terms of the portfolio weights assigned to each position Indus Capital allocated the biggest weight to Banco Bradesco SA (NYSE:BBD), around 1.64% of its 13F portfolio. Amitell Capital is also relatively very bullish on the stock, earmarking 0.45 percent of its 13F equity portfolio to BBD.
Now, some big names were breaking ground themselves. Rima Senvest Management, managed by Richard Mashaal, initiated the biggest position in Banco Bradesco SA (NYSE:BBD). Rima Senvest Management had $9.8 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $7.7 million position during the quarter. The other funds with new positions in the stock are Ronald Hua's Qtron Investments, Frank Fu's CaaS Capital, and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks similar to Banco Bradesco SA (NYSE:BBD). These stocks are Ambev SA (NYSE:ABEV), Canadian Imperial Bank of Commerce (NYSE:CM), Thomson Reuters Corporation (NYSE:TRI), Baxter International Inc. (NYSE:BAX), Public Storage (NYSE:PSA), Johnson Controls International plc (NYSE:JCI), and Align Technology, Inc. (NASDAQ:ALGN). This group of stocks' market valuations are closest to BBD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABEV,18,228714,0 CM,14,408020,1 TRI,28,395480,5 BAX,40,3357530,-2 PSA,26,929024,-5 JCI,41,1023861,7 ALGN,49,2831496,-1 Average,30.9,1310589,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $1311 million. That figure was $187 million in BBD's case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 14 bullish hedge fund positions. Banco Bradesco SA (NYSE:BBD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BBD is 42.6. 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 negative signal and 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately BBD wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BBD investors were disappointed as the stock returned 3.2% since the end of March (through 7/16) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.