Did Hedge Funds Make The Right Call On Credicorp Ltd. (BAP) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Credicorp Ltd. (NYSE:BAP) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Hedge fund interest in Credicorp Ltd. (NYSE:BAP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BAP to other stocks including Waters Corporation (NYSE:WAT), Teladoc Health, Inc (NYSE:TDOC), and West Pharmaceutical Services Inc. (NYSE:WST) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most shareholders, hedge funds are assumed to be underperforming, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the aristocrats of this group, approximately 850 funds. It is estimated that this group of investors oversee most of the hedge fund industry’s total asset base, and by paying attention to their inimitable equity investments, Insider Monkey has figured out several investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Ken Fisher of Fisher Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let’s review the recent hedge fund action encompassing Credicorp Ltd. (NYSE:BAP).

How have hedgies been trading Credicorp Ltd. (NYSE:BAP)?

Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 20 hedge funds with a bullish position in BAP a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Credicorp Ltd. (NYSE:BAP) was held by Fisher Asset Management, which reported holding $140.4 million worth of stock at the end of September. It was followed by AQR Capital Management with a $19.7 million position. Other investors bullish on the company included Marshall Wace LLP, Millennium Management, and Engineers Gate Manager. In terms of the portfolio weights assigned to each position Quantamental Technologies allocated the biggest weight to Credicorp Ltd. (NYSE:BAP), around 0.7% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, setting aside 0.36 percent of its 13F equity portfolio to BAP.

Due to the fact that Credicorp Ltd. (NYSE:BAP) has experienced bearish sentiment from the smart money, it’s easy to see that there was a specific group of money managers that elected to cut their full holdings heading into Q4. It’s worth mentioning that David Blood and Al Gore’s Generation Investment Management said goodbye to the largest position of the 750 funds monitored by Insider Monkey, valued at an estimated $290.2 million in stock, and Hugh Sloane’s Sloane Robinson Investment Management was right behind this move, as the fund said goodbye to about $11 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Credicorp Ltd. (NYSE:BAP) but similarly valued. These stocks are Waters Corporation (NYSE:WAT), Teladoc Health, Inc (NYSE:TDOC), West Pharmaceutical Services Inc. (NYSE:WST), and Yandex NV (NASDAQ:YNDX). All of these stocks’ market caps are closest to BAP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WAT 25 337327 -2
TDOC 36 532644 13
WST 27 346802 -2
YNDX 35 770433 -3
Average 30.75 496802 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $497 million. That figure was $194 million in BAP’s case. Teladoc Health, Inc (NYSE:TDOC) is the most popular stock in this table. On the other hand Waters Corporation (NYSE:WAT) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Credicorp Ltd. (NYSE:BAP) is even less popular than WAT. Hedge funds dodged a bullet by taking a bearish stance towards BAP. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately BAP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BAP investors were disappointed as the stock returned 19.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.