Hedge Funds Are Buying BJ’s Wholesale Club Holdings, Inc. (BJ)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ)? The smart money sentiment can provide an answer to this question.

Is BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) a buy right now? Investors who are in the know were taking a bullish view. The number of long hedge fund positions increased by 7 recently. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that BJ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 17 hedge funds in our database with BJ holdings at the end of June.

Noam Gottesman of GLG Partners

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. With all of this in mind we’re going to check out the key hedge fund action surrounding BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ).

Do Hedge Funds Think BJ Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 41% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in BJ a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Dmitry Balyasny’s Balyasny Asset Management has the biggest position in BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), worth close to $29 million, accounting for 0.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $24.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish contain Matthew Hulsizer’s PEAK6 Capital Management, Israel Englander’s Millennium Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), around 1.48% of its 13F portfolio. Sirios Capital Management is also relatively very bullish on the stock, designating 0.44 percent of its 13F equity portfolio to BJ.

With a general bullishness amongst the heavyweights, specific money managers have jumped into BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ). Balyasny Asset Management had $29 million invested in the company at the end of the quarter. Simon Sadler’s Segantii Capital also made a $7.4 million investment in the stock during the quarter. The following funds were also among the new BJ investors: Steve Cohen’s Point72 Asset Management, Renaissance Technologies, and Jinghua Yan’s TwinBeech Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) but similarly valued. These stocks are Autoliv Inc. (NYSE:ALV), YETI Holdings, Inc. (NYSE:YETI), BRP Inc. (NASDAQ:DOOO), People’s United Financial, Inc. (NASDAQ:PBCT), Encompass Health Corporation (NYSE:EHC), Stevanato Group S.p.A. (NYSE:STVN), and Sotera Health Company (NASDAQ:SHC). This group of stocks’ market values are closest to BJ’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $372 million. That figure was $130 million in BJ’s case. Encompass Health Corporation (NYSE:EHC) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 16 bullish hedge fund positions. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BJ is 46.1. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on BJ as the stock returned 19.4% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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