Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of HP Inc. (NYSE:HPQ).
Is HPQ a good stock to buy now? The best stock pickers were becoming more confident. The number of bullish hedge fund positions inched up by 6 recently. HP Inc. (NYSE:HPQ) was in 41 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 59. Our calculations also showed that HPQ 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 review the latest hedge fund action surrounding HP Inc. (NYSE:HPQ).
Do Hedge Funds Think HPQ Is A Good Stock To Buy Now?
At the end of September, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HPQ over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Baupost Group, managed by Seth Klarman, holds the most valuable position in HP Inc. (NYSE:HPQ). Baupost Group has a $252.6 million position in the stock, comprising 2.7% of its 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding a $213.1 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Steve Cohen’s Point72 Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Baupost Group allocated the biggest weight to HP Inc. (NYSE:HPQ), around 2.73% of its 13F portfolio. Maso Capital is also relatively very bullish on the stock, designating 2.41 percent of its 13F equity portfolio to HPQ.
As one would reasonably expect, key money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, assembled the most outsized position in HP Inc. (NYSE:HPQ). ExodusPoint Capital had $1.8 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also initiated a $1.4 million position during the quarter. The following funds were also among the new HPQ investors: Greg Eisner’s Engineers Gate Manager, Benjamin A. Smith’s Laurion Capital Management, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s check out hedge fund activity in other stocks similar to HP Inc. (NYSE:HPQ). These stocks are Consolidated Edison, Inc. (NYSE:ED), Parker-Hannifin Corporation (NYSE:PH), Liberty Broadband Corp (NASDAQ:LBRDK), NIO Limited (NYSE:NIO), Microchip Technology Incorporated (NASDAQ:MCHP), AFLAC Incorporated (NYSE:AFL), and Stanley Black & Decker, Inc. (NYSE:SWK). This group of stocks’ market caps match HPQ’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 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1414 million. That figure was $1115 million in HPQ’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Consolidated Edison, Inc. (NYSE:ED) is the least popular one with only 18 bullish hedge fund positions. HP Inc. (NYSE:HPQ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HPQ is 61.1. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on HPQ as the stock returned 23.2% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.