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 (Recession is Imminent: We Need A Travel Ban NOW). 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).
Is Barclays PLC (NYSE:BCS) a good stock to buy now? BCS was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 15. BCS investors should pay attention to a decrease in enthusiasm from smart money of late. There were 8 hedge funds in our database with BCS positions at the end of the second quarter. Our calculations also showed that BCS 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. With all of this in mind we’re going to take a look at the key hedge fund action encompassing Barclays PLC (NYSE:BCS).
How are hedge funds trading Barclays PLC (NYSE:BCS)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in BCS a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Barclays PLC (NYSE:BCS) was held by Masters Capital Management, which reported holding $20 million worth of stock at the end of September. It was followed by Stamos Capital with a $6.5 million position. Other investors bullish on the company included Millennium Management, Springhouse Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Springhouse Capital Management allocated the biggest weight to Barclays PLC (NYSE:BCS), around 4.66% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, designating 2.43 percent of its 13F equity portfolio to BCS.
Because Barclays PLC (NYSE:BCS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds that elected to cut their full holdings last quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the biggest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $0.7 million in stock. Donald Sussman’s fund, Paloma Partners, also dumped its stock, about $0.7 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Barclays PLC (NYSE:BCS). These stocks are Dollar Tree, Inc. (NASDAQ:DLTR), Tyson Foods, Inc. (NYSE:TSN), Schlumberger Limited. (NYSE:SLB), Corteva, Inc. (NYSE:CTVA), GSX Techedu Inc. (NYSE:GSX), Weyerhaeuser Co. (NYSE:WY), and Old Dominion Freight Line, Inc. (NASDAQ:ODFL). This group of stocks’ market caps are closest to BCS’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 40.1 hedge funds with bullish positions and the average amount invested in these stocks was $896 million. That figure was $35 million in BCS’s case. Schlumberger Limited. (NYSE:SLB) is the most popular stock in this table. On the other hand GSX Techedu Inc. (NYSE:GSX) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Barclays PLC (NYSE:BCS) is even less popular than GSX. Our overall hedge fund sentiment score for BCS is 15. 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 BCS 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 November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on BCS as the stock returned 48.7% since Q3 (through November 27th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.