Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Brighthouse Financial, Inc. (NASDAQ:BHF).
Brighthouse Financial, Inc. (NASDAQ:BHF) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. BHF has seen an increase in support from the world’s most elite money managers recently. There were 26 hedge funds in our database with BHF positions at the end of the second quarter. Our calculations also showed that BHF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s review the fresh hedge fund action surrounding Brighthouse Financial, Inc. (NASDAQ:BHF).
Emanuel Friedman of EJF Capital
Do Hedge Funds Think BHF Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in BHF over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Greenlight Capital was the largest shareholder of Brighthouse Financial, Inc. (NASDAQ:BHF), with a stake worth $177.3 million reported as of the end of September. Trailing Greenlight Capital was Arrowstreet Capital, which amassed a stake valued at $68.3 million. EJF Capital, Masters Capital Management, and Two Sigma Advisors 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 Greenlight Capital allocated the biggest weight to Brighthouse Financial, Inc. (NASDAQ:BHF), around 11.89% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, dishing out 4.11 percent of its 13F equity portfolio to BHF.
As industrywide interest jumped, some big names were leading the bulls’ herd. Zimmer Partners, managed by Stuart J. Zimmer, established the largest position in Brighthouse Financial, Inc. (NASDAQ:BHF). Zimmer Partners had $5.7 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $5.3 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Gregg Moskowitz’s Interval Partners, and Lawrence Kam’s Sonic Capital.
Let’s go over hedge fund activity in other stocks similar to Brighthouse Financial, Inc. (NASDAQ:BHF). We will take a look at Atlas Corp. (NYSE:ATCO), Investors Bancorp, Inc. (NASDAQ:ISBC), Rent-A-Center Inc (NASDAQ:RCII), Allison Transmission Holdings Inc (NYSE:ALSN), Freedom Holding Corp. (NASDAQ:FRHC), Livent Corporation (NYSE:LTHM), and Ormat Technologies, Inc. (NYSE:ORA). This group of stocks’ market valuations are closest to BHF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATCO | 15 | 1453087 | -3 |
| ISBC | 20 | 73943 | 5 |
| RCII | 28 | 379238 | -1 |
| ALSN | 28 | 349661 | 5 |
| FRHC | 12 | 36936 | -1 |
| LTHM | 27 | 277437 | 0 |
| ORA | 13 | 233291 | -8 |
| Average | 20.4 | 400513 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $401 million. That figure was $459 million in BHF’s case. Rent-A-Center Inc (NASDAQ:RCII) is the most popular stock in this table. On the other hand Freedom Holding Corp. (NASDAQ:FRHC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Brighthouse Financial, Inc. (NASDAQ:BHF) is more popular among hedge funds. Our overall hedge fund sentiment score for BHF is 78.2. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on BHF as the stock returned 7.5% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Brighthouse Financial Inc. (NASDAQ:BHF)
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Disclosure: None. This article was originally published at Insider Monkey.
