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Is Credicorp Ltd. (BAP) Going To Burn These Hedge Funds?

The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Credicorp Ltd. (NYSE:BAP) based on those filings.

Credicorp Ltd. (NYSE:BAP) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds’ portfolios at the end of the second quarter of 2019. At the end of this article we will also compare BAP to other stocks including Slack Technologies Inc (NYSE:WORK), Omnicom Group Inc. (NYSE:OMC), and Grifols SA (NASDAQ:GRFS) to get a better sense of its popularity. Our calculations also showed that BAP isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the recent hedge fund action regarding Credicorp Ltd. (NYSE:BAP).

What have hedge funds been doing with Credicorp Ltd. (NYSE:BAP)?

Heading into the third quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in BAP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

BAP_oct2019

When looking at the institutional investors followed by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in Credicorp Ltd. (NYSE:BAP). Generation Investment Management has a $290.8 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Ken Fisher of Fisher Asset Management, with a $271.1 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions encompass Cliff Asness’s AQR Capital Management, Richard Driehaus’s Driehaus Capital and D. E. Shaw’s D E Shaw.

Since Credicorp Ltd. (NYSE:BAP) has faced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of hedge funds who were dropping their full holdings last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, worth about $13.6 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund said goodbye to about $2.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Credicorp Ltd. (NYSE:BAP). These stocks are Slack Technologies Inc (NYSE:WORK), Omnicom Group Inc. (NYSE:OMC), Grifols SA (NASDAQ:GRFS), and DISH Network Corp. (NASDAQ:DISH). This group of stocks’ market valuations resemble BAP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WORK 37 818197 37
OMC 23 656047 3
GRFS 16 265646 2
DISH 32 1599504 5
Average 27 834849 11.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $835 million. That figure was $759 million in BAP’s case. Slack Technologies Inc (NYSE:WORK) is the most popular stock in this table. On the other hand Grifols SA (NASDAQ:GRFS) is the least popular one with only 16 bullish hedge fund positions. Credicorp Ltd. (NYSE:BAP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BAP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BAP investors were disappointed as the stock returned -8.9% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.

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

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