The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Hewlett Packard Enterprise Company (NYSE:HPE).
Hewlett Packard Enterprise Company (NYSE:HPE) shareholders have witnessed a decrease in enthusiasm from smart money of late. Our calculations also showed that HPE 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
Steven Cohen of Point72 Asset Management
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 cannabis 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. Now we’re going to go over the new hedge fund action surrounding Hewlett Packard Enterprise Company (NYSE:HPE).
How are hedge funds trading Hewlett Packard Enterprise Company (NYSE:HPE)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HPE over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the number one position in Hewlett Packard Enterprise Company (NYSE:HPE). Pzena Investment Management has a $363.6 million position in the stock, comprising 2.8% of its 13F portfolio. The second most bullish fund manager is Oldfield Partners, managed by Richard Oldfield, which holds a $70.4 million position; 8.9% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Steve Cohen’s Point72 Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to Hewlett Packard Enterprise Company (NYSE:HPE), around 8.91% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 2.75 percent of its 13F equity portfolio to HPE.
Seeing as Hewlett Packard Enterprise Company (NYSE:HPE) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies who were dropping their full holdings heading into Q4. Intriguingly, Renaissance Technologies said goodbye to the largest investment of all the hedgies tracked by Insider Monkey, worth close to $26.1 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $7.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 12 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Hewlett Packard Enterprise Company (NYSE:HPE). These stocks are Twilio Inc. (NYSE:TWLO), TransUnion (NYSE:TRU), Evergy, Inc. (NYSE:EVRG), and D.R. Horton, Inc. (NYSE:DHI). This group of stocks’ market valuations resemble HPE’s market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TWLO,52,1549546,-8 TRU,44,895453,7 EVRG,30,757141,5 DHI,65,1265515,14 Average,47.75,1116914,4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.75 hedge funds with bullish positions and the average amount invested in these stocks was $1117 million. That figure was $642 million in HPE’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Evergy, Inc. (NYSE:EVRG) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Hewlett Packard Enterprise Company (NYSE:HPE) is even less popular than EVRG. Hedge funds dodged a bullet by taking a bearish stance towards HPE. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market by 13.2 percentage points. Unfortunately HPE wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); HPE investors were disappointed as the stock returned 0% 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.