At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Credicorp Ltd. (NYSE:BAP).
Credicorp Ltd. (NYSE:BAP) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds' portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Waters Corporation (NYSE:WAT), Teladoc Health, Inc (NYSE:TDOC), and West Pharmaceutical Services Inc. (NYSE:WST) to gather more data points. Our calculations also showed that BAP 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.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. Now let's analyze the recent hedge fund action surrounding Credicorp Ltd. (NYSE:BAP).
Hedge fund activity in Credicorp Ltd. (NYSE:BAP)
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in BAP a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of Credicorp Ltd. (NYSE:BAP), with a stake worth $140.4 million reported as of the end of September. Trailing Fisher Asset Management was AQR Capital Management, which amassed a stake valued at $19.7 million. Marshall Wace LLP, Millennium Management, and Engineers Gate Manager 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 Quantamental Technologies allocated the biggest weight to Credicorp Ltd. (NYSE:BAP), around 0.7% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, dishing out 0.36 percent of its 13F equity portfolio to BAP.
Because Credicorp Ltd. (NYSE:BAP) has faced falling interest from the smart money, we can see that there were a few fund managers that elected to cut their full holdings by the end of the first quarter. At the top of the heap, David Blood and Al Gore's Generation Investment Management dumped the largest stake of the "upper crust" of funds followed by Insider Monkey, worth about $290.2 million in stock. Hugh Sloane's fund, Sloane Robinson Investment Management, also said goodbye to its stock, about $11 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 - not necessarily in the same industry as Credicorp Ltd. (NYSE:BAP) but similarly valued. We will take a look at Waters Corporation (NYSE:WAT), Teladoc Health, Inc (NYSE:TDOC), West Pharmaceutical Services Inc. (NYSE:WST), and Yandex NV (NASDAQ:YNDX). This group of stocks' market values are similar to BAP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WAT,25,337327,-2 TDOC,36,532644,13 WST,27,346802,-2 YNDX,35,770433,-3 Average,30.75,496802,1.5 [/table]
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $497 million. That figure was $194 million in BAP's case. Teladoc Health, Inc (NYSE:TDOC) is the most popular stock in this table. On the other hand Waters Corporation (NYSE:WAT) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Credicorp Ltd. (NYSE:BAP) is even less popular than WAT. Hedge funds clearly dropped the ball on BAP as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on BAP as the stock returned 43.7% so far in the second quarter and outperformed the market by an even larger margin.
