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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Hewlett Packard Enterprise Company (NYSE:HPE) to find out whether there were any major changes in hedge funds' views.
Is HPE a good stock to buy? Hewlett Packard Enterprise Company (NYSE:HPE) was in 34 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 71. HPE shareholders have witnessed an increase in hedge fund sentiment lately. There were 31 hedge funds in our database with HPE positions at the end of the second quarter. Our calculations also showed that HPE 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.
Today there are several tools stock traders use to analyze stocks. A duo of the most under-the-radar tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce their index-focused peers by a superb margin (see the details here).
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. With all of this in mind we're going to check out the recent hedge fund action encompassing Hewlett Packard Enterprise Company (NYSE:HPE).
Do Hedge Funds Think HPE Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HPE over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Hewlett Packard Enterprise Company (NYSE:HPE) was held by Pzena Investment Management, which reported holding $418.2 million worth of stock at the end of September. It was followed by Oldfield Partners with a $64.6 million position. Other investors bullish on the company included Steadfast Capital Management, Renaissance Technologies, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to Hewlett Packard Enterprise Company (NYSE:HPE), around 6.96% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 2.61 percent of its 13F equity portfolio to HPE.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in Hewlett Packard Enterprise Company (NYSE:HPE). Balyasny Asset Management had $16.7 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $1.4 million position during the quarter. The following funds were also among the new HPE investors: Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Peter Algert's Algert Global, and Paul Tudor Jones's Tudor Investment Corp.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hewlett Packard Enterprise Company (NYSE:HPE) but similarly valued. These stocks are The AES Corporation (NYSE:AES), Fortune Brands Home & Security Inc (NYSE:FBHS), Qiagen NV (NASDAQ:QGEN), Solaredge Technologies Inc (NASDAQ:SEDG), Zendesk Inc (NYSE:ZEN), Arch Capital Group Ltd. (NASDAQ:ACGL), and M&T Bank Corporation (NYSE:MTB). This group of stocks' market caps are similar to HPE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AES,32,579345,1 FBHS,33,298974,-1 QGEN,29,580443,-3 SEDG,31,553013,6 ZEN,59,1680411,-4 ACGL,41,1229443,5 MTB,35,503738,5 Average,37.1,775052,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.1 hedge funds with bullish positions and the average amount invested in these stocks was $775 million. That figure was $726 million in HPE's case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Qiagen NV (NASDAQ:QGEN) is the least popular one with only 29 bullish hedge fund positions. Hewlett Packard Enterprise Company (NYSE:HPE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HPE is 30.7. 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 HPE as the stock returned 30.6% 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.