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After several tireless days we have finished crunching the numbers from nearly 817 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 Banco Macro SA (NYSE:BMA).
Is BMA a good stock to buy now? Prominent investors were taking a pessimistic view. The number of long hedge fund bets dropped by 2 lately. Banco Macro SA (NYSE:BMA) was in 9 hedge funds' portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that BMA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 11 hedge funds in our database with BMA positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 66 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.
Crispin Odey of Odey Asset Management Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a gander at the fresh hedge fund action regarding Banco Macro SA (NYSE:BMA).
Do Hedge Funds Think BMA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in BMA 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.
Among these funds, Odey Asset Management Group held the most valuable stake in Banco Macro SA (NYSE:BMA), which was worth $32.9 million at the end of the third quarter. On the second spot was Discovery Capital Management which amassed $5.2 million worth of shares. Millennium Management, D E Shaw, 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 Odey Asset Management Group allocated the biggest weight to Banco Macro SA (NYSE:BMA), around 4.47% of its 13F portfolio. Discovery Capital Management is also relatively very bullish on the stock, earmarking 0.8 percent of its 13F equity portfolio to BMA.
Since Banco Macro SA (NYSE:BMA) has witnessed falling interest from the smart money, we can see that there exists a select few money managers who sold off their entire stakes last quarter. It's worth mentioning that Renaissance Technologies sold off the biggest stake of the "upper crust" of funds followed by Insider Monkey, worth about $4.1 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners was right behind this move, as the fund dumped about $1.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Banco Macro SA (NYSE:BMA) but similarly valued. These stocks are nLIGHT, Inc. (NASDAQ:LASR), Teekay LNG Partners L.P. (NYSE:TGP), Crestwood Equity Partners LP (NYSE:CEQP), Acadia Realty Trust (NYSE:AKR), Rattler Midstream LP (NASDAQ:RTLR), Liberty Oilfield Services Inc. (NYSE:LBRT), and Chase Corporation (NYSE:CCF). All of these stocks' market caps are similar to BMA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LASR,13,56683,1 TGP,10,33043,0 CEQP,2,2370,-2 AKR,14,26230,-2 RTLR,7,54320,0 LBRT,7,8097,1 CCF,11,82044,-1 Average,9.1,37541,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $52 million in BMA's case. Acadia Realty Trust (NYSE:AKR) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 2 bullish hedge fund positions. Banco Macro SA (NYSE:BMA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BMA is 44.4. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BMA as the stock returned 13.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.