The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Bassett Furniture Industries Inc. (NASDAQ:BSET) and determine whether the smart money was really smart about this stock.
Bassett Furniture Industries Inc. (NASDAQ:BSET) has seen an increase in activity from the world’s largest hedge funds in recent months. BSET was in 10 hedge funds’ portfolios at the end of March. There were 8 hedge funds in our database with BSET positions at the end of the previous quarter. Our calculations also showed that BSET isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the new hedge fund action encompassing Bassett Furniture Industries Inc. (NASDAQ:BSET).
How are hedge funds trading Bassett Furniture Industries Inc. (NASDAQ:BSET)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BSET over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, GAMCO Investors held the most valuable stake in Bassett Furniture Industries Inc. (NASDAQ:BSET), which was worth $4.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $4.4 million worth of shares. Arrowstreet Capital, Two Sigma Advisors, and D E Shaw 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 GAMCO Investors allocated the biggest weight to Bassett Furniture Industries Inc. (NASDAQ:BSET), around 0.06% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to BSET.
As aggregate interest increased, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the most outsized position in Bassett Furniture Industries Inc. (NASDAQ:BSET). Millennium Management had $0.1 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.1 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Bassett Furniture Industries Inc. (NASDAQ:BSET) but similarly valued. These stocks are Intellicheck Inc. (NASDAQ:IDN), Organovo Holdings Inc (NASDAQ:ONVO), Verona Pharma plc (NASDAQ:VRNA), and Nabriva Therapeutics plc (NASDAQ:NBRV). This group of stocks’ market values match BSET’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IDN | 3 | 1479 | -1 |
| ONVO | 5 | 3174 | 0 |
| VRNA | 2 | 11303 | -1 |
| NBRV | 8 | 7146 | -1 |
| Average | 4.5 | 5776 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $11 million in BSET’s case. Nabriva Therapeutics plc (NASDAQ:NBRV) is the most popular stock in this table. On the other hand Verona Pharma plc (NASDAQ:VRNA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Bassett Furniture Industries Inc. (NASDAQ:BSET) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BSET as the stock returned 34.9% in Q2 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.
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Disclosure: None. This article was originally published at Insider Monkey.
