Were Hedge Funds Right About Loading Up On Popular Inc (BPOP)?
Keeping this in mind, let's analyze whether Popular Inc (NASDAQ:BPOP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Popular Inc (NASDAQ:BPOP) shareholders have witnessed an increase in activity from the world's largest hedge funds recently. Popular Inc (NASDAQ:BPOP) was in 33 hedge funds' portfolios at the end of June. The all time high for this statistics is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 28 hedge funds in our database with BPOP holdings at the end of March. Our calculations also showed that BPOP 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.
To the average investor there are a lot of methods shareholders can use to size up stocks. Some of the less known methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outperform the S&P 500 by a healthy amount (see the details here).
Anton Schutz of Mendon Capital Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. 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. Keeping this in mind we're going to take a peek at the key hedge fund action surrounding Popular Inc (NASDAQ:BPOP).
What does smart money think about Popular Inc (NASDAQ:BPOP)?
At the end of June, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. By comparison, 30 hedge funds held shares or bullish call options in BPOP a year ago. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Polaris Capital Management held the most valuable stake in Popular Inc (NASDAQ:BPOP), which was worth $144.9 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $84.6 million worth of shares. Two Creeks Capital Management, Citadel Investment Group, and GLG Partners 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 Raging Capital Management allocated the biggest weight to Popular Inc (NASDAQ:BPOP), around 9.74% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 7.16 percent of its 13F equity portfolio to BPOP.
As one would reasonably expect, some big names have been driving this bullishness. Two Creeks Capital Management, managed by Ryan Pedlow, assembled the most valuable position in Popular Inc (NASDAQ:BPOP). Two Creeks Capital Management had $39.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $11.5 million position during the quarter. The following funds were also among the new BPOP investors: David Andre and Astro Teller's Cerebellum Capital, Greg Eisner's Engineers Gate Manager, and Anton Schutz's Mendon Capital Advisors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Popular Inc (NASDAQ:BPOP) but similarly valued. We will take a look at Penske Automotive Group, Inc. (NYSE:PAG), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), First Horizon National Corporation (NYSE:FHN), TFI International Inc. (NYSE:TFII), Vicor Corp (NASDAQ:VICR), New Residential Investment Corp (NYSE:NRZ), and Companhia Paranaense de Energia (NYSE:ELP). This group of stocks' market valuations are similar to BPOP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAG,21,83068,2 AJRD,25,405251,2 FHN,35,384471,4 TFII,10,67009,-2 VICR,19,81691,5 NRZ,22,121379,-1 ELP,12,39175,5 Average,20.6,168863,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $169 million. That figure was $521 million in BPOP's case. First Horizon National Corporation (NYSE:FHN) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 10 bullish hedge fund positions. Popular Inc (NASDAQ:BPOP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BPOP is 86. 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 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 23% in 2020 through October 30th and still beat the market by 20.1 percentage points. Hedge funds were also right about betting on BPOP as the stock returned 14.8% since the end of Q2 (through 10/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
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