Hedge Funds Are Dumping Brunswick Corporation (BC)

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. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. What do these smart investors think about Brunswick Corporation (NYSE:BC)?

Brunswick Corporation (NYSE:BC) has seen a decrease in hedge fund sentiment in recent months. Brunswick Corporation (NYSE:BC) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistic is 42. There were 42 hedge funds in our database with BC positions at the end of the first quarter. Our calculations also showed that BC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 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.

Michael Lowenstein of Kensico Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the recent hedge fund action encompassing Brunswick Corporation (NYSE:BC).

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

At the end of the second quarter, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BC over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cantillon Capital Management, managed by William von Mueffling, holds the largest position in Brunswick Corporation (NYSE:BC). Cantillon Capital Management has a $388.3 million position in the stock, comprising 2.6% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $161.3 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism encompass Michael Lowenstein’s Kensico Capital, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital and Anthony Bozza’s Lakewood Capital Management. In terms of the portfolio weights assigned to each position Levin Capital Strategies allocated the biggest weight to Brunswick Corporation (NYSE:BC), around 4.24% of its 13F portfolio. Kensico Capital is also relatively very bullish on the stock, designating 3.78 percent of its 13F equity portfolio to BC.

Judging by the fact that Brunswick Corporation (NYSE:BC) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds that elected to cut their entire stakes heading into Q3. Interestingly, Steve Cohen’s Point72 Asset Management dumped the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling close to $12.6 million in stock, and Martin D. Sass’s MD Sass was right behind this move, as the fund dumped about $12.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q3.

Let’s check out hedge fund activity in other stocks similar to Brunswick Corporation (NYSE:BC). We will take a look at AngloGold Ashanti Limited (NYSE:AU), Reinsurance Group of America Inc (NYSE:RGA), Skechers USA Inc (NYSE:SKX), Tempur Sealy International Inc. (NYSE:TPX), Anaplan, Inc. (NYSE:PLAN), PVH Corp (NYSE:PVH), and Lattice Semiconductor Corporation (NASDAQ:LSCC). This group of stocks’ market caps resemble BC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $981 million. That figure was $1096 million in BC’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 12 bullish hedge fund positions. Brunswick Corporation (NYSE:BC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BC is 60.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately BC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BC were disappointed as the stock returned 0.2% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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