Is HDFC Bank Limited (HDB) A Good Stock To Buy?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded HDFC Bank Limited (NYSE:HDB) based on those filings.

Is HDB a good stock to buy? HDFC Bank Limited (NYSE:HDB) was in 40 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. HDB has seen an increase in support from the world’s most elite money managers of late. There were 39 hedge funds in our database with HDB holdings at the end of June. Our calculations also showed that HDB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to analyze the latest hedge fund action surrounding HDFC Bank Limited (NYSE:HDB).

Do Hedge Funds Think HDB Is A Good Stock To Buy Now?

At Q3’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HDB over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in HDFC Bank Limited (NYSE:HDB), worth close to $371.3 million, amounting to 0.2% of its total 13F portfolio. The second largest stake is held by Impax Asset Management, led by Ian Simm, holding a $309 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Ryan Pedlow’s Two Creeks Capital Management, Robert Pitts’s Steadfast Capital Management and Andreas Halvorsen’s Viking Global. In terms of the portfolio weights assigned to each position Two Creeks Capital Management allocated the biggest weight to HDFC Bank Limited (NYSE:HDB), around 13.18% of its 13F portfolio. Blackcrane Capital is also relatively very bullish on the stock, setting aside 6.58 percent of its 13F equity portfolio to HDB.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into HDFC Bank Limited (NYSE:HDB) headfirst. Viking Global, managed by Andreas Halvorsen, created the biggest position in HDFC Bank Limited (NYSE:HDB). Viking Global had $122.7 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also made a $10.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Simon Sadler’s Segantii Capital, James Chen’s Ovata Capital Management, and Renaissance Technologies.

Let’s go over hedge fund activity in other stocks similar to HDFC Bank Limited (NYSE:HDB). We will take a look at American Express Company (NYSE:AXP), Bristol Myers Squibb Company (NYSE:BMY), Starbucks Corporation (NASDAQ:SBUX), Raytheon Technologies Corp (NYSE:RTX), The Boeing Company (NYSE:BA), Union Pacific Corporation (NYSE:UNP), and BlackRock, Inc. (NYSE:BLK). This group of stocks’ market caps resemble HDB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 56.3 hedge funds with bullish positions and the average amount invested in these stocks was $6976 million. That figure was $1795 million in HDB’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand BlackRock, Inc. (NYSE:BLK) is the least popular one with only 44 bullish hedge fund positions. Compared to these stocks HDFC Bank Limited (NYSE:HDB) is even less popular than BLK. Our overall hedge fund sentiment score for HDB is 34.6. 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. Hedge funds dodged a bullet by taking a bearish stance towards HDB. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th but managed to beat the market again by 5.6 percentage points. Unfortunately HDB wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); HDB investors were disappointed as the stock returned -10.4% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Suggested Articles:

• 15 Companies That Benefitted The Most From The Pandemic
• 15 Biggest Public Companies in the world
• 15 Most Sustainable Companies In the United States

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