We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Hewlett Packard Enterprise Company (NYSE:HPE) and determine whether hedge funds skillfully traded this stock.
Is Hewlett Packard Enterprise Company (NYSE:HPE) the right investment to pursue these days? The best stock pickers were becoming more confident. The number of bullish hedge fund bets moved up by 2 in recent months. Hewlett Packard Enterprise Company (NYSE:HPE) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistics is 71. Our calculations also showed that HPE isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
According to most stock holders, hedge funds are perceived as unimportant, old investment tools of the past. While there are over 8000 funds with their doors open today, We choose to focus on the leaders of this group, about 850 funds. These hedge fund managers oversee the lion’s share of the smart money’s total asset base, and by tailing their unrivaled stock picks, Insider Monkey has revealed a number of investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Keeping this in mind let’s check out the new hedge fund action regarding Hewlett Packard Enterprise Company (NYSE:HPE).
Hedge fund activity in Hewlett Packard Enterprise Company (NYSE:HPE)
At the end of June, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in HPE a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the largest position in Hewlett Packard Enterprise Company (NYSE:HPE), worth close to $382 million, amounting to 2.5% of its total 13F portfolio. Sitting at the No. 2 spot is Oldfield Partners, managed by Richard Oldfield, which holds a $69.8 million position; 8.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions comprise Israel Englander’s Millennium Management, Robert Pitts’s Steadfast Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Oldfield Partners allocated the biggest weight to Hewlett Packard Enterprise Company (NYSE:HPE), around 8.1% of its 13F portfolio. Cloverdale Capital Management is also relatively very bullish on the stock, setting aside 2.71 percent of its 13F equity portfolio to HPE.
Consequently, specific money managers have been driving this bullishness. Steadfast Capital Management, managed by Robert Pitts, assembled the biggest position in Hewlett Packard Enterprise Company (NYSE:HPE). Steadfast Capital Management had $44.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $9 million investment in the stock during the quarter. The other funds with brand new HPE positions are C. Jonathan Gattman’s Cloverdale Capital Management, Ray Dalio’s Bridgewater Associates, and Mika Toikka’s AlphaCrest Capital Management.
Let’s check out hedge fund activity in other stocks similar to Hewlett Packard Enterprise Company (NYSE:HPE). These stocks are Grifols SA (NASDAQ:GRFS), Nucor Corporation (NYSE:NUE), FactSet Research Systems Inc. (NYSE:FDS), Seagate Technology plc (NASDAQ:STX), Masimo Corporation (NASDAQ:MASI), AngloGold Ashanti Limited (NYSE:AU), and Godaddy Inc (NYSE:GDDY). This group of stocks’ market valuations match HPE’s market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GRFS,21,583023,-2 NUE,26,115702,0 FDS,21,200608,0 STX,27,2100119,-5 MASI,32,160712,1 AU,16,726270,-3 GDDY,55,2539026,1 Average,28.3,917923,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $918 million. That figure was $694 million in HPE’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 16 bullish hedge fund positions. Hewlett Packard Enterprise Company (NYSE:HPE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HPE is 39.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately HPE wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HPE were disappointed as the stock returned -2.5% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
Powerful Vatican Cardinal Becciu resigns amid scandal
ROME (AP) — The powerful head of the Vatican’s saint-making office, Cardinal Angelo Becciu, resigned suddenly Thursday from the post and renounced his rights as a cardinal amid a financial scandal that has reportedly implicated him indirectly.
The Vatican provided no details on why Pope Francis accepted Becciu’s resignation in a statement late Thursday. In the one-sentence announcement, the Holy See said only that Francis had accepted Becciu’s resignation as prefect of the Congregation for the Causes of Saints “and his rights connected to the cardinalate.”
Becciu, the former No. 2 in the Vatican’s secretariat of state, has been reportedly implicated in a financial scandal involving the Vatican’s investment in a London real estate deal that has lost the Holy See millions of euros in fees paid to middlemen.
The Vatican prosecutor has placed several Vatican officials under investigation, as well as the middlemen, but not Becciu. Becciu has defended the soundness of the original investment and denied any wrongdoing, and it’s not clear whether the scandal itself was behind his resignation or possibly sparked a separate line of inquiry.
But the late-breaking news of his resignation, the severity of his apparent sanction, the Vatican’s tight-lipped release and the unexpected downfall of one of the most powerful Vatican officials all suggested a shocking new chapter in the scandal, which has convulsed the Vatican for the past year.
The last time a cardinal’s rights were removed was when American Theodore McCarrick renounced his rights and privileges as a cardinal in July 2018 amid a sexual abuse investigation. He was subsequently defrocked altogether by Francis last year for sexually abusing adults as well as minors.
Before him, the late Scottish Cardinal Keith O’Brien in 2015 relinquished the rights and privileges of being a cardinal after unidentified priests alleged sexual misconduct. O’Brien was, however, allowed to retain the cardinal’s title and he died a member of the College of Cardinals, the elite group of churchmen whose main job is to elect a pope.
In the Vatican statement, the Holy See identified Becciu as “His Eminence Cardinal Angelo Becciu,” making clear he remained a cardinal but without any rights.
At 72, Becciu would have been able to participate in a possible future conclave to elect Francis’ successor. Cardinals over age 80 can’t vote. But by renouncing his rights as a cardinal, Becciu has relinquished his rights to take part.
Becciu was the “substitute,” or top deputy in the secretariat of state from 2011-2018, when Francis made him a cardinal and moved him into the Vatican’s saint-making office. He straddled two pontificates, having been named by Pope Benedict XVI and entrusted with essentially running the Curia, or Vatican bureaucracy, a position that gave him enormous influence and power.
The financial problems date from 2014, when the Vatican entered into a real estate venture by investing over $200 million in a fund run by an Italian businessman. The deal gave the Holy See 45% of the luxury building at 60 Sloane Ave. in London’s Chelsea neighborhood.
The money came from the secretariat of state’s asset portfolio, which is funded in large part by the Peter’s Pence donations of Catholics around the world for the pope to use for charity and Vatican expenses.
The Holy See decided in November 2018, after Becciu had left the secretariat of state, to exit the fund, end its relationship with the businessman and buy out the remainder of the building. It did so after Becciu’s successor determined that the mortgage was too onerous and that the businessman was losing money for the Vatican in some of the fund’s other investments.
The buyout deal, however, cost the Holy See tens of millions of euros more and sparked the Vatican investigation that has so far implicated a half-dozen Vatican employees.
Becciu has insisted he wasn’t in power during the 2018 buyout deal and always acted in the sole interests of the Holy See. In the Vatican prosecutor’s initial warrant, Becciu is not named, and it remains unclear if his role in managing the secretariat of state’s vast asset portfolio was connected with the resignation.
His former boss, Secretary of State Pietro Parolin, has said the whole matter was “opaque” and needed to be clarified. Francis, for his part, has vowed to get to the bottom of what he has said was evidence of corruption in the Holy See.
Francis would meet regularly with Becciu in the Italian’s role as prefect of the saint-making office, since every month or two he would present lists of candidates for possible beatification or canonization for Francis to approve.
In addition, since the beginning of his pontificate, Francis had an annual luncheon date at Becciu’s apartment along with 10 priests on the Thursday of Holy Week leading up to Easter. The Vatican always reported the get-togethers were a chance for the pope to chat informally with Becciu and priests of his diocese on the day the church celebrates the institution of the priesthood.
The luncheon didn’t happen this year amid the Vatican’s coronavirus lockdown.
Novavax Kicks Off 10,000 Patient Covid Vaccine Study in U.K.
(Bloomberg) — Novavax Inc. climbed as much as 6.7% in extended trading on plans to start enrolling participants for a late-stage study of its experimental shot for the novel coronavirus in 10,000 patients in the U.K.The company joins the ranks of AstraZeneca Plc, Pfizer Inc. with German partner BioNTech SE and Moderna Inc. as its vaccine enters the final stretch on the path toward regulatory approval. There are roughly 38 shots being tested in humans around the world and more than 140 others in earlier stages of study, according to the World Health Organization’s estimates.Half of the people enrolled in Novavax’s placebo-controlled trial will get two shots of NVX-CoV2373 with Matrix-M, the biotech company’s adjuvant meant to make the immunizing shot more powerful. At least a quarter of study participants will be seniors, and priority will be given to enrolling racial and ethnic minorities hardest hit by the virus.The study has a two-pronged target to show effectiveness in those with symptoms of the disease or in moderate to severe Covid-19 patients, and achieving either goal may be enough to get a regulatory nod. Up to 400 people in the study will also get a seasonal flu vaccine to gauge the potential of administering a Covid shot alongside a flu shot.Novavax shares rose as much as 6.7% to $109.31 in postmarket trading in New York. The Gaithersburg, Maryland-based company secured a $1.6 billion U.S. contract in July on top of $388 million in funding from the Coalition for Epidemic Preparedness Innovations in May.“We have three shots on goal,” Gregory Glenn, the company’s president of research and development, said in a phone call, referring to other Covid-19 trials. Planning is also underway for a larger, 30,000 person study in the U.S. that will start enrolling in mid-October, while a smaller Phase 2b study in South Africa is ongoing.As drug developers large and small race to come up with an effective inoculation, Novavax has seen its stock price climb nearly 2,500% this year on its rapid progress against the disease. Since revealing a first look at Novavax’s shot in people in August, the stock has given back roughly 40% of that surge in shares. Day trader interest in vaccine and Covid-19 medicines faded from frenzied levels earlier this year as virus rates in the U.S. eased over the summer. So-called biotech tourists may also lose interest as a company gets closer to commercialization.(Updates to add shares)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Kenya anti-graft agency slams procurement of COVID-19 equipment
By Humphrey Malalo
NAIROBI (Reuters) – Kenya’s anti-corruption agency has documented evidence of “criminal” behaviour by officials over the procurement of COVID-19 emergency equipment, said a report presented to the Senate.
The Ethics and Anti-Corruption Commission began investigating allegations of graft in June over the procurement and supply of COVID-19 equipment by the Kenya Medical Supplies Authority. The commission said there was “irregular expenditure” of 7.8 billion Kenyan shillings ($71.96 million).
The revelations come at a time when medical staff in the East African nation have gone on a series of strikes over low pay and poor-quality protective equipment to treat COVID-19 patients. [nL4N2FN1WR]
“The investigation established criminal culpability on the part of public officials in the purchase and supply of COVID-19 emergency commodities at Kenya Medical Supplies Authority (KEMSA) that led to irregular expenditure of public funds,” the commission said in a report it sent to lawmakers on Wednesday.
The watchdog shared its preliminary findings with the Director of Public Prosecutions and has recommended charges against some officials and a system-wide review at the procurement authority to “seal corruption loopholes in future.”
A spokeswoman from the Health Ministry was unavailable for comment. KEMSA is a state-run agency which comes under the ministry.
The head of KEMSA was suspended last month over allegations that it had procured low quality items and inflated prices of others.
In a separate report seen by Reuters on Thursday, the Public Procurement Regulatory Authority catalogued instances of alleged inflation of prices for products procured by KEMSA.
Paracetamol tablets sold at 40 shillings per pack were bought for 66.50 shillings during the pandemic, while alcohol-based sanitizers priced at 313 shillings were purchased at 495 shillings, the report said.
“There was no evidence of indicative price indices obtained through market survey,” the report said.
It also alleged that most “tenders were retrospectively negotiated and evaluated after the deliveries” and “some of the negotiated prices were not as per the prices as proposed.”
Last month, police teargassed protesters in Nairobi during a demonstration against alleged corruption in the procurement of protective gear meant for defence against COVID-19.
Health workers in Kenya have posted images on social media showing what they claim is inadequate protective equipment provided to them, such as porous dust overalls that would not prevent the spread of the virus.
($1 = 108.4000 Kenyan shillings)
(writing by Omar Mohammed; editing by Katharine Houreld and Alexandra Hudson)
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