Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) based on that data.
Hedge fund interest in Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) shares was flat at the end of last quarter. This is usually a negative indicator. 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 American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), Bank of Marin Bancorp (NASDAQ:BMRC), and Banc of California, Inc. (NYSE:BANC) to gather more data points. Our calculations also showed that BLX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 44 percentage points since March 2017 (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 stocks that are in our short portfolio.
[caption id="attachment_249122" align="aligncenter" width="399"] Wall Street Bull[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's review the fresh hedge fund action regarding Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX).
What have hedge funds been doing with Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX)?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in BLX over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Paradice Investment Management was the largest shareholder of Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX), with a stake worth $22.8 million reported as of the end of September. Trailing Paradice Investment Management was Motley Fool Asset Management, which amassed a stake valued at $3.9 million. Beddow Capital Management was 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 Beddow Capital Management allocated the biggest weight to Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX), around 3.16% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, earmarking 2.53 percent of its 13F equity portfolio to BLX.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX). These stocks are American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), Bank of Marin Bancorp (NASDAQ:BMRC), Banc of California, Inc. (NYSE:BANC), and Crescent Point Energy Corp (NYSE:CPG). This group of stocks' market values are closest to BLX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AXL,22,44333,-1 BMRC,6,13433,0 BANC,10,32635,-4 CPG,10,11861,-4 Average,12,25566,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $30 million in BLX's case. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is the most popular stock in this table. On the other hand Bank of Marin Bancorp (NASDAQ:BMRC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is even less popular than BMRC. Hedge funds dodged a bullet by taking a bearish stance towards BLX. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately BLX wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BLX investors were disappointed as the stock returned 11.3% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.