There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Popular Inc (NASDAQ:BPOP).
Is Popular Inc (NASDAQ:BPOP) ready to rally soon? Money managers are in a bullish mood. The number of long hedge fund positions advanced by 1 lately. Our calculations also showed that bpop isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman, GLG Partners[/caption]
Let's view the latest hedge fund action surrounding Popular Inc (NASDAQ:BPOP).
Hedge fund activity in Popular Inc (NASDAQ:BPOP)
Heading into the second quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BPOP over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Polaris Capital Management held the most valuable stake in Popular Inc (NASDAQ:BPOP), which was worth $216.4 million at the end of the first quarter. On the second spot was AQR Capital Management which amassed $158.8 million worth of shares. Moreover, GLG Partners, Alyeska Investment Group, and Millennium Management were also bullish on Popular Inc (NASDAQ:BPOP), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers were leading the bulls' herd. Moore Global Investments, managed by Louis Bacon, assembled the most valuable position in Popular Inc (NASDAQ:BPOP). Moore Global Investments had $16.7 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow's Blue Mountain Capital also initiated a $6.1 million position during the quarter. The other funds with new positions in the stock are Lee Ainslie's Maverick Capital, Emanuel J. Friedman's EJF Capital, and D. E. Shaw's D E Shaw.
Let's check out hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). We will take a look at IDACORP Inc (NYSE:IDA), Seaboard Corporation (NYSE:SEB), Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), and Antero Midstream Corp (NYSE:AM). This group of stocks' market caps are closest to BPOP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IDA,18,243743,-2 SEB,11,68653,1 PAC,7,85862,4 AM,19,321459,4 Average,13.75,179929,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $777 million in BPOP's case. Antero Midstream Corp (NYSE:AM) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Popular Inc (NASDAQ:BPOP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on BPOP as the stock returned 2.4% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.