The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider HDFC Bank Limited (NYSE:HDB) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is HDB a good stock to buy? HDFC Bank Limited (NYSE:HDB) shareholders have witnessed a decrease in hedge fund sentiment recently. HDFC Bank Limited (NYSE:HDB) was in 34 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 42. There were 42 hedge funds in our database with HDB positions at the end of the second quarter. Our calculations also showed that HDB 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous gauges shareholders can use to evaluate stocks. A duo of the less known gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can beat the market by a solid amount (see the details here).
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Keeping this in mind let's analyze the latest hedge fund action encompassing HDFC Bank Limited (NYSE:HDB).
Do Hedge Funds Think HDB Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HDB over the last 21 quarters. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in HDFC Bank Limited (NYSE:HDB) was held by Fisher Asset Management, which reported holding $286.2 million worth of stock at the end of September. It was followed by Two Creeks Capital Management with a $221.1 million position. Other investors bullish on the company included Steadfast Capital Management, Impax Asset Management, and Driehaus Capital. In terms of the portfolio weights assigned to each position Two Creeks Capital Management allocated the biggest weight to HDFC Bank Limited (NYSE:HDB), around 14.44% of its 13F portfolio. Aubrey Capital Management is also relatively very bullish on the stock, dishing out 5.01 percent of its 13F equity portfolio to HDB.
Judging by the fact that HDFC Bank Limited (NYSE:HDB) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers who sold off their positions entirely in the third quarter. Interestingly, William Duhamel's Route One Investment Company dropped the largest investment of all the hedgies tracked by Insider Monkey, valued at close to $61.7 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $19.1 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 8 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as HDFC Bank Limited (NYSE:HDB) but similarly valued. These stocks are Fidelity National Information Services Inc. (NYSE:FIS), TOTAL S.A. (NYSE:TOT), Citigroup Inc. (NYSE:C), Pinduoduo Inc. (NASDAQ:PDD), Raytheon Technologies Corp (NYSE:RTX), S&P Global Inc. (NYSE:SPGI), and BlackRock, Inc. (NYSE:BLK). This group of stocks' market caps resemble HDB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FIS,88,7940617,-23 TOT,18,639601,-1 C,91,5545152,-5 PDD,34,4331330,4 RTX,55,2988856,-4 SPGI,71,3030583,0 BLK,39,922746,2 Average,56.6,3628412,-3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.6 hedge funds with bullish positions and the average amount invested in these stocks was $3628 million. That figure was $1121 million in HDB's case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 18 bullish hedge fund positions. HDFC Bank Limited (NYSE:HDB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HDB is 32.2. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on HDB as the stock returned 41% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.