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Is Barclays PLC (BCS) Going to Burn These Hedge Funds?

Abigail Fisher

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Barclays PLC (NYSE:BCS).

Barclays PLC (NYSE:BCS) has seen an increase in support from the world's most elite money managers of late. Our calculations also showed that BCS isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

BCS_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's view the fresh hedge fund action encompassing Barclays PLC (NYSE:BCS).

Hedge fund activity in Barclays PLC (NYSE:BCS)

At Q2's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in BCS a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Bill Miller

Among these funds, Eagle Capital Management held the most valuable stake in Barclays PLC (NYSE:BCS), which was worth $101.6 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $18.5 million worth of shares. Moreover, Masters Capital Management, Citadel Investment Group, and Arrowstreet Capital were also bullish on Barclays PLC (NYSE:BCS), allocating a large percentage of their portfolios to this stock.

Consequently, key hedge funds have jumped into Barclays PLC (NYSE:BCS) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Barclays PLC (NYSE:BCS). Marshall Wace LLP had $0.5 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer's PEAK6 Capital Management, Bill Miller's Miller Value Partners, and Paul Tudor Jones's Tudor Investment Corp.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Barclays PLC (NYSE:BCS) but similarly valued. These stocks are Canadian Pacific Railway Limited (NYSE:CP), Thomson Reuters Corporation (NYSE:TRI), TE Connectivity Ltd. (NYSE:TEL), and Carnival Corporation & Plc (NYSE:CUK). All of these stocks' market caps resemble BCS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CP,30,2313888,0 TRI,17,316318,0 TEL,27,1350859,1 CUK,10,121231,2 Average,21,1025574,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $1026 million. That figure was $131 million in BCS's case. Canadian Pacific Railway Limited (NYSE:CP) is the most popular stock in this table. On the other hand Carnival Corporation & Plc (NYSE:CUK) is the least popular one with only 10 bullish hedge fund positions. Barclays PLC (NYSE:BCS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BCS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BCS investors were disappointed as the stock returned -1.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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