Hedge Funds Are Selling Banco Macro SA (BMA)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Banco Macro SA (NYSE:BMA).

Banco Macro SA (NYSE:BMA) has experienced a decrease in support from the world’s most elite money managers in recent months. BMA was in 10 hedge funds’ portfolios at the end of June. There were 16 hedge funds in our database with BMA positions at the end of the previous quarter. Our calculations also showed that BMA isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Crispin Odey

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the fresh hedge fund action encompassing Banco Macro SA (NYSE:BMA).

Hedge fund activity in Banco Macro SA (NYSE:BMA)

Heading into the third quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in BMA over the last 16 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).


More specifically, Odey Asset Management Group was the largest shareholder of Banco Macro SA (NYSE:BMA), with a stake worth $142.4 million reported as of the end of March. Trailing Odey Asset Management Group was EMS Capital, which amassed a stake valued at $43.4 million. GLG Partners, Arrowstreet Capital, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.

Since Banco Macro SA (NYSE:BMA) has experienced falling interest from the smart money, it’s easy to see that there exists a select few money managers that elected to cut their full holdings by the end of the second quarter. Intriguingly, Israel Englander’s Millennium Management dropped the largest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $19.5 million in stock, and John Horseman’s Horseman Capital Management was right behind this move, as the fund cut about $10 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds by the end of the second quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Banco Macro SA (NYSE:BMA) but similarly valued. We will take a look at Essent Group Ltd (NYSE:ESNT), First Industrial Realty Trust, Inc. (NYSE:FR), The Macerich Company (NYSE:MAC), and Nuance Communications Inc. (NASDAQ:NUAN). All of these stocks’ market caps match BMA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESNT 30 325693 3
FR 18 290383 7
MAC 21 288149 -1
NUAN 28 529243 0
Average 24.25 358367 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $358 million. That figure was $257 million in BMA’s case. Essent Group Ltd (NYSE:ESNT) is the most popular stock in this table. On the other hand First Industrial Realty Trust, Inc. (NYSE:FR) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Banco Macro SA (NYSE:BMA) is even less popular than FR. Hedge funds dodged a bullet by taking a bearish stance towards BMA. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BMA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BMA investors were disappointed as the stock returned -64.3% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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