Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the first 6 weeks of the fourth quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Bridgepoint Education Inc (NYSE:BPI) to find out whether it was one of their high conviction long-term ideas.
Is Bridgepoint Education Inc (NYSE:BPI) going to take off soon? Hedge funds are betting on the stock. The number of long hedge fund bets increased by 1 lately. Our calculations also showed that BPI isn’t among the 30 most popular stocks among hedge funds. BPI was in 17 hedge funds’ portfolios at the end of the third quarter of 2018. There were 16 hedge funds in our database with BPI holdings at the end of the previous quarter.
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 view the fresh hedge fund action encompassing Bridgepoint Education Inc (NYSE:BPI).
How have hedgies been trading Bridgepoint Education Inc (NYSE:BPI)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in BPI heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Nantahala Capital Management was the largest shareholder of Bridgepoint Education Inc (NYSE:BPI), with a stake worth $19.6 million reported as of the end of September. Trailing Nantahala Capital Management was Renaissance Technologies, which amassed a stake valued at $15.1 million. D E Shaw, Millennium Management, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Driehaus Capital, managed by Richard Driehaus, initiated the biggest position in Bridgepoint Education Inc (NYSE:BPI). Driehaus Capital had $4.6 million invested in the company at the end of the quarter. Josh Goldberg’s G2 Investment Partners Management also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new BPI investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Mike Vranos’s Ellington, and Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to Bridgepoint Education Inc (NYSE:BPI). These stocks are HC2 Holdings Inc (NYSEMKT:HCHC), PICO Holdings Inc (NASDAQ:PICO), Standard Diversified Inc. (NYSE:SDI), and Virtus Global Dividend & Income Fund Inc. (NYSE:ZTR). This group of stocks’ market caps match BPI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HCHC | 12 | 13639 | 0 |
| PICO | 10 | 33626 | 0 |
| SDI | 2 | 3851 | 2 |
| ZTR | 2 | 207 | 2 |
| Average | 6.5 | 12831 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $74 million in BPI’s case. HC2 Holdings Inc (NYSEMKT:HCHC) is the most popular stock in this table. On the other handStandard Diversified Inc. (NYSE:SDI) and Virtus Global Dividend & Income Fund Inc. (NYSE:ZTR) are the least popular ones with only 2 bullish hedge fund positions each. Compared to these stocks Bridgepoint Education Inc (NYSE:BPI) 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.
