Hedge Funds Are Dumping Banco BBVA Argentina S.A. (BBAR)

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 (Recession is Imminent: We Need A Travel Ban NOW). 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 Banco BBVA Argentina S.A. (NYSE:BBAR).

Banco BBVA Argentina S.A. (NYSE:BBAR) shareholders have witnessed a decrease in hedge fund interest lately. Banco BBVA Argentina S.A. (NYSE:BBAR) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 15. Our calculations also showed that BBAR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. Keeping this in mind we’re going to go over the new hedge fund action surrounding Banco BBVA Argentina S.A. (NYSE:BBAR).

What does smart money think about Banco BBVA Argentina S.A. (NYSE:BBAR)?

Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -63% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BBAR 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 adding to their stakes substantially (or already accumulated large positions).

The largest stake in Banco BBVA Argentina S.A. (NYSE:BBAR) was held by Arrowstreet Capital, which reported holding $1.5 million worth of stock at the end of September. It was followed by Paloma Partners with a $1.1 million position. The only other hedge fund that is bullish on the company was Two Sigma Advisors.

Because Banco BBVA Argentina S.A. (NYSE:BBAR) has faced falling interest from the aggregate hedge fund industry, we can see that there were a few fund managers who were dropping their entire stakes heading into Q4. At the top of the heap, Renaissance Technologies dumped the biggest stake of all the hedgies tracked by Insider Monkey, valued at close to $0.8 million in stock. Schonfeld Strategic Advisors, also dropped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Banco BBVA Argentina S.A. (NYSE:BBAR). We will take a look at Clovis Oncology Inc (NASDAQ:CLVS), Nautilus, Inc. (NYSE:NLS), Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), Front Yard Residential Corporation (NYSE:RESI), Flexion Therapeutics Inc (NASDAQ:FLXN), Globalstar, Inc. (NYSE:GSAT), and FuelCell Energy, Inc. (NASDAQ:FCEL). All of these stocks’ market caps resemble BBAR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLVS 15 69500 -3
NLS 17 86762 5
LOMA 9 37079 -2
RESI 20 56519 -5
FLXN 17 121644 2
GSAT 11 49117 2
FCEL 17 35393 9
Average 15.1 65145 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $3 million in BBAR’s case. Front Yard Residential Corporation (NYSE:RESI) is the most popular stock in this table. On the other hand Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Banco BBVA Argentina S.A. (NYSE:BBAR) is even less popular than LOMA. Our overall hedge fund sentiment score for BBAR is 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. Hedge funds clearly dropped the ball on BBAR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on BBAR as the stock returned 21.8% since Q3 (through November 23rd) and outperformed the market by an even larger margin.

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