Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards HP Inc. (NYSE:HPQ) at the end of the third quarter and determine whether the smart money was really smart about this stock.
HP Inc. (NYSE:HPQ) has experienced a decrease in enthusiasm from smart money lately. HP Inc. (NYSE:HPQ) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 59. There were 39 hedge funds in our database with HPQ positions at the end of the second quarter. Our calculations also showed that HPQ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Cliff Asness of AQR Capital 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 we’re going to take a look at the latest hedge fund action regarding HP Inc. (NYSE:HPQ).
Do Hedge Funds Think HPQ Is A Good Stock To Buy Now?
At third quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the second quarter of 2021. By comparison, 41 hedge funds held shares or bullish call options in HPQ a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in HP Inc. (NYSE:HPQ), which was worth $511.9 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $166.5 million worth of shares. Laurion Capital Management, D E Shaw, and Alkeon 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 Te Ahumairangi Investment Management allocated the biggest weight to HP Inc. (NYSE:HPQ), around 1.46% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, earmarking 1.14 percent of its 13F equity portfolio to HPQ.
Due to the fact that HP Inc. (NYSE:HPQ) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that slashed their full holdings in the third quarter. It’s worth mentioning that Renaissance Technologies dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $41.8 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also said goodbye to its stock, about $16.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to HP Inc. (NYSE:HPQ). These stocks are Williams Companies, Inc. (NYSE:WMB), West Pharmaceutical Services Inc. (NYSE:WST), Liberty Broadband Corp (NASDAQ:LBRDK), LyondellBasell Industries NV (NYSE:LYB), Brown-Forman Corporation (NYSE:BF), MongoDB, Inc. (NASDAQ:MDB), and Corning Incorporated (NYSE:GLW). This group of stocks’ market valuations match HPQ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WMB | 40 | 658659 | 1 |
| WST | 29 | 794549 | -2 |
| LBRDK | 63 | 7101088 | 0 |
| LYB | 39 | 676597 | -2 |
| BF | 31 | 1656640 | 0 |
| MDB | 47 | 2171957 | 3 |
| GLW | 40 | 408052 | -2 |
| Average | 41.3 | 1923935 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.3 hedge funds with bullish positions and the average amount invested in these stocks was $1924 million. That figure was $1044 million in HPQ’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand West Pharmaceutical Services Inc. (NYSE:WST) is the least popular one with only 29 bullish hedge fund positions. HP Inc. (NYSE:HPQ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HPQ is 24.6. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on HPQ as the stock returned 35.2% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
