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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Hewlett Packard Enterprise Company (NYSE:HPE), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is HPE a good stock to buy? Hewlett Packard Enterprise Company (NYSE:HPE) shareholders have witnessed a decrease in hedge fund interest of late. Hewlett Packard Enterprise Company (NYSE:HPE) was in 33 hedge funds' portfolios at the end of September. The all time high for this statistic is 71. Our calculations also showed that HPE isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Steven Cohen of Point72 Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let's check out the recent hedge fund action regarding Hewlett Packard Enterprise Company (NYSE:HPE).
Do Hedge Funds Think HPE Is A Good Stock To Buy Now?
At Q3's end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in HPE a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Pzena Investment Management was the largest shareholder of Hewlett Packard Enterprise Company (NYSE:HPE), with a stake worth $618.1 million reported as of the end of September. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $136.1 million. Oldfield Partners, Balyasny Asset Management, and Adage Capital Management 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 Oldfield Partners allocated the biggest weight to Hewlett Packard Enterprise Company (NYSE:HPE), around 10.73% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 2.45 percent of its 13F equity portfolio to HPE.
Seeing as Hewlett Packard Enterprise Company (NYSE:HPE) has faced a decline in interest from the smart money, it's easy to see that there exists a select few hedge funds who sold off their positions entirely last quarter. Intriguingly, Renaissance Technologies sold off the largest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $49.2 million in stock, and Michael Rockefeller and KarláKroeker's Woodline Partners was right behind this move, as the fund dumped about $11.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Hewlett Packard Enterprise Company (NYSE:HPE) but similarly valued. We will take a look at Qorvo Inc (NASDAQ:QRVO), Cincinnati Financial Corporation (NASDAQ:CINF), Ally Financial Inc (NYSE:ALLY), Duke Realty Corporation (NYSE:DRE), KB Financial Group, Inc. (NYSE:KB), Healthpeak Properties, Inc. (NYSE:PEAK), and Teradyne, Inc. (NYSE:TER). This group of stocks' market caps resemble HPE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QRVO,44,1950993,4 CINF,20,661958,-2 ALLY,57,2517368,3 DRE,13,67287,-2 KB,8,21128,0 PEAK,20,202911,-2 TER,42,1369839,-2 Average,29.1,970212,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $970 million. That figure was $1002 million in HPE's case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 8 bullish hedge fund positions. Hewlett Packard Enterprise Company (NYSE:HPE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HPE is 43.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately HPE wasn't nearly as popular as these 5 stocks and hedge funds that were betting on HPE were disappointed as the stock returned 0.7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.