In this article we are going to use hedge fund sentiment as a tool and determine whether Banco Santander, S.A. (NYSE:SAN) 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 Banco Santander, S.A. (NYSE:SAN) a buy, sell, or hold? Hedge funds were reducing their bets on the stock. The number of long hedge fund bets fell by 2 recently. Banco Santander, S.A. (NYSE:SAN) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 23. Our calculations also showed that SAN 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.
At the moment there are a multitude of tools stock market investors have at their disposal to value publicly traded companies. Some of the most innovative tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a very impressive amount (see the details here).
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 take a gander at the key hedge fund action encompassing Banco Santander, S.A. (NYSE:SAN).
Do Hedge Funds Think SAN Is A Good Stock To Buy Now?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SAN over the last 21 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Banco Santander, S.A. (NYSE:SAN), with a stake worth $178.4 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $25 million. Ariel Investments, AQR Capital Management, and Arrowstreet Capital 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 Ariel Investments allocated the biggest weight to Banco Santander, S.A. (NYSE:SAN), around 0.17% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, earmarking 0.16 percent of its 13F equity portfolio to SAN.
Since Banco Santander, S.A. (NYSE:SAN) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few hedgies that decided to sell off their full holdings heading into Q4. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, worth about $2 million in stock, and Ronald Hua’s Qtron Investments was right behind this move, as the fund sold off about $0.8 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to Banco Santander, S.A. (NYSE:SAN). These stocks are WEC Energy Group, Inc. (NYSE:WEC), The Bank of New York Mellon Corporation (NYSE:BK), Johnson Controls International plc (NYSE:JCI), Banco Bradesco SA (NYSE:BBD), Splunk Inc (NASDAQ:SPLK), IQVIA Holdings, Inc. (NYSE:IQV), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD). All of these stocks’ market caps match SAN’s market cap.
|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 41.9 hedge funds with bullish positions and the average amount invested in these stocks was $1963 million. That figure was $232 million in SAN’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Banco Bradesco SA (NYSE:BBD) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Banco Santander, S.A. (NYSE:SAN) is even less popular than BBD. Our overall hedge fund sentiment score for SAN is 21.3. 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 clearly dropped the ball on SAN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 SAN as the stock returned 78.9% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.