At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not BBX Capital Corporation (NYSE:BBX) makes for a good investment right now.
BBX Capital Corporation (NYSE:BBX) was in 15 hedge funds’ portfolios at the end of the third quarter of 2018. BBX investors should pay attention to an increase in enthusiasm from smart money of late. There were 14 hedge funds in our database with BBX holdings at the end of the previous quarter. Our calculations also showed that BBX isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ large-cap stock picks indeed failed to the beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
While collecting data on the company, we came across Avenir Capital’s letter for the December 2017 quarter. The stock was the best contributor for the investment manager’s Avenir Global Fund. Here is what the letter said regarding the stock:
“For the full year, our biggest winner was BBX Capital (BBX: NYSE) which increased 63% to $7.97 on the back of the partial IPO of its main operating business, Bluegreen (BXG: NYSE). BBX has been a wonderful investment for Avenir generating nice profits as the share price increased 140% over our average entry price. The strong share price performance, however, has only partially closed the gap to underlying value as the company’s operating performance has materially increased its underlying value over the time we have owned it. If the market gave full credit for BBX’s 90% ownership of the now publicly listed BXG, at BXG’s year-end price of $18.26, BBX Capital would be worth over $12 per share or a 50% increase from the year-end price. Bluegreen is also trading cheaply compared to its major peers leading to still further upside should it trade more in line with peers.”
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BBX Capital Corporation (NYSE:BBX) but similarly valued. These stocks are Spartan Stores, Inc. (NASDAQ:SPTN), Calgon Carbon Corporation (NYSE:CCC), and Omega Flex, Inc. (NASDAQ:OFLX). This group of stocks’ market caps resemble BBX’s market cap.
Among these funds, Angelo Gordon & Co held the most valuable stake in BBX Capital Corporation (NYSE:BBX), which was worth $21.5 million at the end of the third quarter. On the second spot was Fondren Management which amassed $10.6 million worth of shares. Moreover, Renaissance Technologies, Alta Fundamental Advisers, and Scoggin were also bullish on BBX Capital Corporation (NYSE:BBX), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, created the biggest position in BBX Capital Corporation (NYSE:BBX). D E Shaw had $0.2 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also initiated a $0.1 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to BBX Capital Corporation (NYSE:BBX). We will take a look at SpartanNash Company (NASDAQ:SPTN), PIMCO Corporate & Income Strategy Fund (NYSE:PCN), Churchill Capital Corp. (NYSE:CCC), and Omega Flex, Inc. (NASDAQ:OFLX). All of these stocks’ market caps are similar to BBX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPTN | 14 | 41519 | -3 |
| PCN | 1 | 195 | 0 |
| CCC | 25 | 354458 | 25 |
| OFLX | 4 | 10154 | 1 |
| Average | 11 | 102 | 5.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $65 million in BBX’s case. Churchill Capital Corp. (NYSE:CCC) is the most popular stock in this table. On the other hand 0 is the least popular one with only 1 bullish hedge fund positions. BBX Capital Corporation (NYSE:BBX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CCC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
