Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Brookfield Asset Management Inc. (NYSE:BAM) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Brookfield Asset Management Inc. (NYSE:BAM) worth your attention right now? Money managers were becoming less hopeful. The number of long hedge fund positions retreated by 2 recently. Brookfield Asset Management Inc. (NYSE:BAM) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that BAM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 34 hedge funds in our database with BAM holdings at the end of June.
Charles Akre of Akre Capital Management
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 view the new hedge fund action regarding Brookfield Asset Management Inc. (NYSE:BAM).
Do Hedge Funds Think BAM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2021. By comparison, 35 hedge funds held shares or bullish call options in BAM a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Viking Global held the most valuable stake in Brookfield Asset Management Inc. (NYSE:BAM), which was worth $909 million at the end of the third quarter. On the second spot was Akre Capital Management which amassed $702.4 million worth of shares. Markel Gayner Asset Management, Horizon Asset Management, and Greenlea Lane Capital 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 Greenlea Lane Capital allocated the biggest weight to Brookfield Asset Management Inc. (NYSE:BAM), around 15.23% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, setting aside 5.97 percent of its 13F equity portfolio to BAM.
Judging by the fact that Brookfield Asset Management Inc. (NYSE:BAM) has experienced falling interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that decided to sell off their entire stakes heading into Q4. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management cut the biggest position of all the hedgies followed by Insider Monkey, valued at an estimated $10.4 million in call options, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $8.1 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Brookfield Asset Management Inc. (NYSE:BAM) but similarly valued. We will take a look at Mercadolibre Inc (NASDAQ:MELI), The Blackstone Group Inc. (NYSE:BX), PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), Mondelez International Inc (NASDAQ:MDLZ), and British American Tobacco plc (NYSE:BTI). This group of stocks’ market caps are similar to BAM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MELI | 68 | 4371182 | -6 |
| BX | 54 | 2545773 | 0 |
| PNC | 41 | 506241 | 3 |
| EQNR | 11 | 163324 | 0 |
| CNI | 42 | 7392349 | 2 |
| MDLZ | 46 | 1922079 | -7 |
| BTI | 9 | 724383 | -3 |
| Average | 38.7 | 2517904 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $2518 million. That figure was $2499 million in BAM’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Brookfield Asset Management Inc. (NYSE:BAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BAM is 47.8. 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 gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on BAM as the stock returned 3.2% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
