At Insider Monkey we follow around 700 of the best-performing investors and even though many of them lost money in the last couple of months (70% of hedge funds lost money in October whereas S&P 500 ETF lost about 7%), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
BMC Stock Holdings, Inc. (NASDAQ:BMCH) has seen an increase in hedge fund interest of late. BMCH was in 25 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with BMCH positions at the end of the previous quarter. Our calculations also showed that bmch isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a glance at the fresh hedge fund action encompassing BMC Stock Holdings, Inc. (NASDAQ:BMCH).
What does the smart money think about BMC Stock Holdings, Inc. (NASDAQ:BMCH)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BMCH over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in BMC Stock Holdings, Inc. (NASDAQ:BMCH) was held by Lakewood Capital Management, which reported holding $33.2 million worth of stock at the end of September. It was followed by MFP Investors with a $23.6 million position. Other investors bullish on the company included Odey Asset Management Group, Highland Capital Management, and Raging Capital Management.
As industrywide interest jumped, key money managers have been driving this bullishness. Odey Asset Management Group, managed by Crispin Odey, initiated the biggest position in BMC Stock Holdings, Inc. (NASDAQ:BMCH). Odey Asset Management Group had $17.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $1.7 million position during the quarter. The only other fund with a new position in the stock is Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BMC Stock Holdings, Inc. (NASDAQ:BMCH) but similarly valued. We will take a look at Endurance International Group Holdings Inc (NASDAQ:EIGI), Hercules Capital, Inc. (NYSE:HTGC), iKang Healthcare Group Inc (NASDAQ:KANG), and Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA). This group of stocks’ market values match BMCH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EIGI | 15 | 144114 | 0 |
| HTGC | 10 | 19814 | 0 |
| KANG | 13 | 225754 | 3 |
| KNSA | 9 | 282489 | -5 |
| Average | 11.75 | 168043 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $169 million in BMCH’s case. Endurance International Group Holdings Inc (NASDAQ:EIGI) is the most popular stock in this table. On the other hand Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks BMC Stock Holdings, Inc. (NASDAQ:BMCH) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
