We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Brady Corporation (NYSE:BRC).
Brady Corporation (NYSE:BRC) was in 18 hedge funds’ portfolios at the end of the third quarter of 2019. BRC investors should be aware of an increase in enthusiasm from smart money lately. There were 13 hedge funds in our database with BRC positions at the end of the previous quarter. Our calculations also showed that BRC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are many metrics stock traders can use to evaluate publicly traded companies. A duo of the less utilized metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top fund managers can trounce the S&P 500 by a very impressive margin (see the details here).
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the fresh hedge fund action encompassing Brady Corporation (NYSE:BRC).
Hedge fund activity in Brady Corporation (NYSE:BRC)
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the second quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in BRC a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Brady Corporation (NYSE:BRC), which was worth $124.1 million at the end of the third quarter. On the second spot was Ariel Investments which amassed $29.8 million worth of shares. GLG Partners, D E Shaw, 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 Ariel Investments allocated the biggest weight to Brady Corporation (NYSE:BRC), around 0.4% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to BRC.
Consequently, specific money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Brady Corporation (NYSE:BRC). Arrowstreet Capital had $2.7 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Paul Tudor Jones’s Tudor Investment Corp, and Mike Vranos’s Ellington.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Brady Corporation (NYSE:BRC) but similarly valued. We will take a look at Ameris Bancorp (NASDAQ:ABCB), EnerSys (NYSE:ENS), American Assets Trust, Inc (NYSE:AAT), and Quaker Chemical Corporation (NYSE:KWR). All of these stocks’ market caps are closest to BRC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABCB | 14 | 143727 | -2 |
| ENS | 17 | 90798 | 1 |
| AAT | 11 | 36996 | -4 |
| KWR | 18 | 154202 | 5 |
| Average | 15 | 106431 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $200 million in BRC’s case. Quaker Chemical Corporation (NYSE:KWR) is the most popular stock in this table. On the other hand American Assets Trust, Inc (NYSE:AAT) is the least popular one with only 11 bullish hedge fund positions. Brady Corporation (NYSE:BRC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on BRC, though not to the same extent, as the stock returned 7.9% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
