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 Barclays PLC (NYSE:BCS) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Barclays PLC (NYSE:BCS) investors should pay attention to an increase in enthusiasm from smart money recently. Our calculations also showed that BCS isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the new hedge fund action surrounding Barclays PLC (NYSE:BCS).
How have hedgies been trading Barclays PLC (NYSE:BCS)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in BCS a year ago. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Barclays PLC (NYSE:BCS), with a stake worth $10.9 million reported as of the end of September. Trailing Renaissance Technologies was Masters Capital Management, which amassed a stake valued at $9.1 million. Stamos Capital, Springhouse Capital Management, and Citadel Investment Group 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 Springhouse Capital Management allocated the biggest weight to Barclays PLC (NYSE:BCS), around 3.44% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, setting aside 2.06 percent of its 13F equity portfolio to BCS.
Now, specific money managers were leading the bulls’ herd. Masters Capital Management, managed by Mike Masters, initiated the most valuable position in Barclays PLC (NYSE:BCS). Masters Capital Management had $9.1 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Barclays PLC (NYSE:BCS). We will take a look at Archer Daniels Midland Company (NYSE:ADM), Ecopetrol S.A. (NYSE:EC), Liberty Broadband Corp (NASDAQ:LBRDA), and Nutrien Ltd. (NYSE:NTR). This group of stocks’ market values are closest to BCS’s market value.
|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 23 hedge funds with bullish positions and the average amount invested in these stocks was $399 million. That figure was $33 million in BCS’s case. Archer Daniels Midland Company (NYSE:ADM) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 12 bullish hedge fund positions. Barclays PLC (NYSE:BCS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on BCS, though not to the same extent, as the stock returned 24.7% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.