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Where Do Hedge Funds Stand On Popular Inc (BPOP)?

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In this article you are going to find out whether hedge funds think Popular Inc (NASDAQ:BPOP) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Popular Inc (NASDAQ:BPOP) investors should be aware of a decrease in hedge fund sentiment recently. Popular Inc (NASDAQ:BPOP) was in 33 hedge funds' portfolios at the end of June. The all time high for this statistic is 35. There were 34 hedge funds in our database with BPOP positions at the end of the first quarter. Our calculations also showed that BPOP isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Bernard Horn of Polaris Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Now let's take a glance at the fresh hedge fund action surrounding Popular Inc (NASDAQ:BPOP).

Do Hedge Funds Think BPOP Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BPOP over the last 24 quarters. So, let's find out 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 $252.9 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $121.2 million worth of shares. AQR Capital Management, Basswood Capital, and Arrowstreet Capital 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 Polaris Capital Management allocated the biggest weight to Popular Inc (NASDAQ:BPOP), around 8.16% of its 13F portfolio. Arctis Global is also relatively very bullish on the stock, setting aside 6.39 percent of its 13F equity portfolio to BPOP.

Because Popular Inc (NASDAQ:BPOP) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there was a specific group of funds that elected to cut their positions entirely heading into Q3. Intriguingly, Ryan Pedlow's Two Creeks Capital Management dropped the largest position of the 750 funds tracked by Insider Monkey, worth about $11.3 million in stock, and Clint Carlson's Carlson Capital was right behind this move, as the fund dumped about $9.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q3.

Let's now review hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). We will take a look at Primerica, Inc. (NYSE:PRI), BOK Financial Corporation (NASDAQ:BOKF), Hayward Holdings, Inc. (NYSE:HAYW), Eagle Materials, Inc. (NYSE:EXP), CACI International Inc (NYSE:CACI), Pan American Silver Corp. (NASDAQ:PAAS), and Rexnord Corp (NYSE:RXN). This group of stocks' market valuations resemble BPOP's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRI,20,486272,0 BOKF,13,438145,-4 HAYW,19,225060,-6 EXP,36,243658,1 CACI,26,491404,5 PAAS,24,312456,-3 RXN,29,521863,4 Average,23.9,388408,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $840 million in BPOP's case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 13 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 75.8. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on BPOP as the stock returned 6.2% since the end of Q2 (through 10/15) 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.