The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Hope Bancorp, Inc. (NASDAQ:HOPE) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Hope Bancorp, Inc. (NASDAQ:HOPE) worth your attention right now? The smart money was in an optimistic mood. The number of bullish hedge fund bets advanced by 1 lately. Hope Bancorp, Inc. (NASDAQ:HOPE) was in 19 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that HOPE isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 58 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.
Michael Gelband of ExodusPoint Capital
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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now let's review the key hedge fund action encompassing Hope Bancorp, Inc. (NASDAQ:HOPE).
What have hedge funds been doing with Hope Bancorp, Inc. (NASDAQ:HOPE)?
At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the first quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in HOPE a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in Hope Bancorp, Inc. (NASDAQ:HOPE). Pzena Investment Management has a $29.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $8.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism contain Mario Gabelli's GAMCO Investors, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Pzena Investment Management allocated the biggest weight to Hope Bancorp, Inc. (NASDAQ:HOPE), around 0.19% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to HOPE.
As aggregate interest increased, key hedge funds have jumped into Hope Bancorp, Inc. (NASDAQ:HOPE) headfirst. Millennium Management, managed by Israel Englander, established the most valuable position in Hope Bancorp, Inc. (NASDAQ:HOPE). Millennium Management had $3.8 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $1.5 million investment in the stock during the quarter. The other funds with brand new HOPE positions are Paul Marshall and Ian Wace's Marshall Wace LLP and Paul Tudor Jones's Tudor Investment Corp.
Let's check out hedge fund activity in other stocks similar to Hope Bancorp, Inc. (NASDAQ:HOPE). These stocks are eXp World Holdings, Inc. (NASDAQ:EXPI), Marcus & Millichap Inc (NYSE:MMI), Compass Diversified Holdings (NYSE:CODI), Translate Bio, Inc. (NASDAQ:TBIO), ACM Research, Inc. (NASDAQ:ACMR), MFA Financial, Inc. (NYSE:MFA), and OneSpan Inc. (NASDAQ:OSPN). This group of stocks' market values match HOPE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXPI,11,43524,5 MMI,8,77692,-1 CODI,4,16735,0 TBIO,26,494430,19 ACMR,11,85100,1 MFA,16,71744,0 OSPN,15,142351,2 Average,13,133082,3.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $55 million in HOPE's case. Translate Bio, Inc. (NASDAQ:TBIO) is the most popular stock in this table. On the other hand Compass Diversified Holdings (NYSE:CODI) is the least popular one with only 4 bullish hedge fund positions. Hope Bancorp, Inc. (NASDAQ:HOPE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOPE is 70.1. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately HOPE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HOPE were disappointed as the stock returned -16.3% in Q3 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.