Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Credicorp Ltd. (NYSE:BAP) changed recently.
Credicorp Ltd. (NYSE:BAP) investors should pay attention to a decrease in hedge fund sentiment recently. Credicorp Ltd. (NYSE:BAP) was in 19 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 28. Our calculations also showed that BAP 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.
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 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 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.
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 15 best blue chip stocks 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. Now we’re going to take a look at the new hedge fund action encompassing Credicorp Ltd. (NYSE:BAP).
Do Hedge Funds Think BAP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BAP over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Credicorp Ltd. (NYSE:BAP), with a stake worth $70.1 million reported as of the end of September. Trailing Fisher Asset Management was Ariel Investments, which amassed a stake valued at $21.7 million. AQR Capital Management, Marshall Wace LLP, and Renaissance Technologies 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 Ariel Investments allocated the biggest weight to Credicorp Ltd. (NYSE:BAP), around 0.32% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 0.18 percent of its 13F equity portfolio to BAP.
Because Credicorp Ltd. (NYSE:BAP) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that elected to cut their entire stakes by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management cut the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $1.2 million in stock. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Credicorp Ltd. (NYSE:BAP). These stocks are CBOE Global Markets Inc (NASDAQ:CBOE), Zynga Inc (NASDAQ:ZNGA), Sunrun Inc (NASDAQ:RUN), Pegasystems Inc. (NASDAQ:PEGA), NetApp Inc. (NASDAQ:NTAP), Lamb Weston Holdings, Inc. (NYSE:LW), and UDR, Inc. (NYSE:UDR). This group of stocks’ market values are similar to BAP’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 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1137 million. That figure was $139 million in BAP’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand UDR, Inc. (NYSE:UDR) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Credicorp Ltd. (NYSE:BAP) is even less popular than UDR. Our overall hedge fund sentiment score for BAP is 24.4. 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 BAP 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on BAP as the stock returned 30.3% since Q3 (through December 14th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.