Hedge Funds Started Selling Credicorp Ltd. (BAP) Before Coronavirus

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Credicorp Ltd. (NYSE:BAP).

Is Credicorp Ltd. (NYSE:BAP) a first-rate investment right now? The smart money is in a bearish mood. The number of long hedge fund positions went down by 6 lately. Our calculations also showed that BAP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). BAP was in 22 hedge funds’ portfolios at the end of December. There were 28 hedge funds in our database with BAP holdings at the end of the previous quarter.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Blood

David Blood of Generation Investment Management

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 take a look at the fresh hedge fund action regarding Credicorp Ltd. (NYSE:BAP).

How are hedge funds trading Credicorp Ltd. (NYSE:BAP)?

At Q4’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BAP 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.

Among these funds, Generation Investment Management held the most valuable stake in Credicorp Ltd. (NYSE:BAP), which was worth $290.2 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $221 million worth of shares. AQR Capital Management, Sloane Robinson Investment Management, and Millennium 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 Sloane Robinson Investment Management allocated the biggest weight to Credicorp Ltd. (NYSE:BAP), around 4.24% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, designating 1.86 percent of its 13F equity portfolio to BAP.

Seeing as Credicorp Ltd. (NYSE:BAP) has witnessed bearish sentiment from hedge fund managers, we can see that there was a specific group of money managers who were dropping their full holdings by the end of the third quarter. Interestingly, Richard Driehaus’s Driehaus Capital sold off the largest position of all the hedgies monitored by Insider Monkey, valued at an estimated $31 million in stock, and Joseph Samuels’s Islet Management was right behind this move, as the fund dumped about $9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 6 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Credicorp Ltd. (NYSE:BAP). These stocks are Equifax Inc. (NYSE:EFX), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Magna International Inc. (NYSE:MGA), and Dover Corporation (NYSE:DOV). This group of stocks’ market values match BAP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EFX 32 1615426 4
CHKP 30 626708 6
MGA 23 688858 4
DOV 29 547165 -6
Average 28.5 869539 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $870 million. That figure was $612 million in BAP’s case. Equifax Inc. (NYSE:EFX) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Credicorp Ltd. (NYSE:BAP) is even less popular than MGA. Hedge funds dodged a bullet by taking a bearish stance towards BAP. 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 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately BAP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BAP investors were disappointed as the stock returned -29.9% 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.

5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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