In this article we are going to use hedge fund sentiment as a tool and determine whether Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is BBVA a good stock to buy now? Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) shareholders have witnessed a decrease in enthusiasm from smart money lately. Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 11. There were 11 hedge funds in our database with BBVA holdings at the end of June. Our calculations also showed that BBVA 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. With all of this in mind let’s go over the fresh hedge fund action surrounding Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA).
Do Hedge Funds Think BBVA Is A Good Stock To Buy Now?
At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the second quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in BBVA a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA). Fisher Asset Management has a $98.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $2.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions include Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Fisher Asset Management allocated the biggest weight to Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), around 0.09% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to BBVA.
Since Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) has experienced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers who sold off their entire stakes heading into Q4. Interestingly, Robert Richards’s Heathbridge Capital Management dumped the largest investment of all the hedgies followed by Insider Monkey, worth an estimated $21.4 million in stock, and Claes Fornell’s CSat Investment Advisory was right behind this move, as the fund dumped about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA). We will take a look at Paycom Software Inc (NYSE:PAYC), Teladoc Health, Inc (NYSE:TDOC), Garmin Ltd. (NASDAQ:GRMN), Telefonica S.A. (NYSE:TEF), EPAM Systems Inc (NYSE:EPAM), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Akamai Technologies, Inc. (NASDAQ:AKAM). This group of stocks’ market values are similar to BBVA’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $736 million. That figure was $104 million in BBVA’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BBVA is 36.6. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BBVA as the stock returned 82.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.