How do we determine whether Banco Bradesco SA (NYSE:BBD) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Banco Bradesco SA (NYSE:BBD) was in 16 hedge funds' portfolios at the end of September. BBD shareholders have witnessed an increase in support from the world's most elite money managers in recent months. There were 14 hedge funds in our database with BBD positions at the end of the previous quarter. Our calculations also showed that BBD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a lot of metrics market participants employ to size up publicly traded companies. Two of the most underrated metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can beat the broader indices by a healthy amount (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the recent hedge fund action surrounding Banco Bradesco SA (NYSE:BBD).
What does smart money think about Banco Bradesco SA (NYSE:BBD)?
Heading into the fourth quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BBD over the last 17 quarters. 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 $411.8 million worth of stock at the end of September. It was followed by Capital Growth Management with a $108 million position. Other investors bullish on the company included Arrowstreet Capital, AQR Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Banco Bradesco SA (NYSE:BBD), around 8.27% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, setting aside 0.45 percent of its 13F equity portfolio to BBD.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Highland Capital Management, managed by James Dondero, initiated the most outsized position in Banco Bradesco SA (NYSE:BBD). Highland Capital Management had $1 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new BBD investors: Donald Sussman's Paloma Partners, Dmitry Balyasny's Balyasny Asset Management, and Andre F. Perold's HighVista Strategies.
Let's check out hedge fund activity in other stocks similar to Banco Bradesco SA (NYSE:BBD). These stocks are China Life Insurance Company Ltd. (NYSE:LFC), Dominion Resources, Inc. (NYSE:D), Canadian National Railway Company (NYSE:CNI), and The Southern Company (NYSE:SO). This group of stocks' market values resemble BBD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LFC,8,34563,0 D,42,766846,3 CNI,27,2084810,-1 SO,31,1190703,9 Average,27,1019231,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1019 million. That figure was $595 million in BBD's case. Dominion Resources, Inc. (NYSE:D) is the most popular stock in this table. On the other hand China Life Insurance Company Ltd. (NYSE:LFC) is the least popular one with only 8 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. 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BBD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BBD investors were disappointed as the stock returned -0.4% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.