We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Hope Bancorp, Inc. (NASDAQ:HOPE).
Is Hope Bancorp, Inc. (NASDAQ:HOPE) an outstanding stock to buy now? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund positions increased by 1 lately. Our calculations also showed that HOPE isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the latest hedge fund action encompassing Hope Bancorp, Inc. (NASDAQ:HOPE).
What have hedge funds been doing with Hope Bancorp, Inc. (NASDAQ:HOPE)?
Heading into the third quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in HOPE a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena's Pzena Investment Management has the most valuable position in Hope Bancorp, Inc. (NASDAQ:HOPE), worth close to $39.5 million, comprising 0.2% of its total 13F portfolio. Coming in second is GAMCO Investors, led by Mario Gabelli, holding a $8.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Renaissance Technologies, Ken Griffin's Citadel Investment Group and D. E. Shaw's D E Shaw.
Now, some big names have jumped into Hope Bancorp, Inc. (NASDAQ:HOPE) headfirst. GLG Partners, managed by Noam Gottesman, established the most valuable position in Hope Bancorp, Inc. (NASDAQ:HOPE). GLG Partners had $1.7 million invested in the company at the end of the quarter. Irving Kahn's Kahn Brothers also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new HOPE investors: Benjamin A. Smith's Laurion Capital Management and Chuck Royce's Royce & Associates.
Let's now take a look at hedge fund activity in other stocks similar to Hope Bancorp, Inc. (NASDAQ:HOPE). We will take a look at Change Healthcare Inc. (NASDAQ:CHNG), Regenxbio Inc (NASDAQ:RGNX), Uniti Group Inc. (NASDAQ:UNIT), and McDermott International, Inc. (NYSE:MDR). This group of stocks' market values are similar to HOPE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHNG,29,274010,29 RGNX,14,219288,-5 UNIT,21,184179,0 MDR,22,289410,0 Average,21.5,241722,6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $66 million in HOPE's case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Regenxbio Inc (NASDAQ:RGNX) is the least popular one with only 14 bullish hedge fund positions. Hope Bancorp, Inc. (NASDAQ:HOPE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on HOPE, though not to the same extent, as the stock returned 5.1% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
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