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Is Popular Inc (BPOP) Going to Burn These Hedge Funds?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Popular Inc (NASDAQ:BPOP) based on that data.

Popular Inc (NASDAQ:BPOP) has seen a decrease in hedge fund interest lately. BPOP was in 28 hedge funds’ portfolios at the end of March. There were 33 hedge funds in our database with BPOP positions at the end of the previous quarter. Our calculations also showed that BPOP isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Clint Carlson of Carlson Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the latest hedge fund action surrounding Popular Inc (NASDAQ:BPOP).

What does smart money think about Popular Inc (NASDAQ:BPOP)?

Heading into the second quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in BPOP 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.

Is BPOP A Good Stock To Buy?

Among these funds, Polaris Capital Management held the most valuable stake in Popular Inc (NASDAQ:BPOP), which was worth $143.4 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $112.8 million worth of shares. Alyeska Investment Group, Point72 Asset Management, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to Popular Inc (NASDAQ:BPOP), around 9.6% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, dishing out 8.67 percent of its 13F equity portfolio to BPOP.

Seeing as Popular Inc (NASDAQ:BPOP) has witnessed declining sentiment from the smart money, we can see that there was a specific group of funds who sold off their positions entirely by the end of the first quarter. It’s worth mentioning that Jeffrey Hinkle’s Shoals Capital Management cut the largest position of the 750 funds followed by Insider Monkey, valued at an estimated $10 million in stock. Ray Dalio’s fund, Bridgewater Associates, also dumped its stock, about $1.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Popular Inc (NASDAQ:BPOP). We will take a look at Global Blood Therapeutics Inc (NASDAQ:GBT), Hexcel Corporation (NYSE:HXL), Strayer Education Inc (NASDAQ:STRA), and Grocery Outlet Holding Corp. (NASDAQ:GO). This group of stocks’ market values resemble BPOP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GBT 23 431206 0
HXL 27 187145 -3
STRA 13 228871 0
GO 17 102998 3
Average 20 237555 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $469 million in BPOP’s case. Hexcel Corporation (NYSE:HXL) is the most popular stock in this table. On the other hand Strayer Education Inc (NASDAQ:STRA) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Popular Inc (NASDAQ:BPOP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately BPOP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BPOP were disappointed as the stock returned 12.8% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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