Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA).
Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) investors should pay attention to a decrease in support from the world’s most elite money managers recently. Our calculations also showed that BBVA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 41 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the recent hedge fund action encompassing Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA).
Hedge fund activity in Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA)
At the end of the fourth quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BBVA over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), with a stake worth $296.5 million reported as of the end of September. Trailing Fisher Asset Management was Heathbridge Capital Management, which amassed a stake valued at $30.9 million. Two Sigma Advisors, Citadel Investment Group, and CSat Investment Advisory 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 Heathbridge Capital Management allocated the biggest weight to Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), around 6.31% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, designating 0.3 percent of its 13F equity portfolio to BBVA.
Seeing as Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few funds that decided to sell off their entire stakes last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dropped the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $0.2 million in stock. Israel Englander’s fund, Millennium Management, also cut its stock, about $0.1 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) but similarly valued. We will take a look at Public Storage (NYSE:PSA), Canadian Imperial Bank of Commerce (NYSE:CM), Ford Motor Company (NYSE:F), and Roper Technologies, Inc. (NYSE:ROP). This group of stocks’ market caps are similar to BBVA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $880 million. That figure was $339 million in BBVA’s case. Roper Technologies, Inc. (NYSE:ROP) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is even less popular than CM. Hedge funds dodged a bullet by taking a bearish stance towards BBVA. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but managed to beat the market by 3.1 percentage points. Unfortunately BBVA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BBVA investors were disappointed as the stock returned -30.5% during the same time period 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 most of these stocks already outperformed the market so far in Q1.
Disclosure: None. This article was originally published at Insider Monkey.