Hedge Funds Are Getting Bullish On BRP Inc. (DOOO)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards BRP Inc. (NASDAQ:DOOO) to find out whether there were any major changes in hedge funds’ views.

BRP Inc. (NASDAQ:DOOO) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DOOO has experienced an increase in support from the world’s most elite money managers of late. There were 17 hedge funds in our database with DOOO positions at the end of the first quarter. Our calculations also showed that DOOO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Joel Greenblatt of Gotham Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this stock pitch. We go through lists like the 10 best growth stocks to buy 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 we’re going to analyze the recent hedge fund action encompassing BRP Inc. (NASDAQ:DOOO).

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

Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in DOOO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in BRP Inc. (NASDAQ:DOOO) was held by D E Shaw, which reported holding $45.4 million worth of stock at the end of June. It was followed by Arrowstreet Capital with a $26.6 million position. Other investors bullish on the company included Balyasny Asset Management, Two Sigma Advisors, and Renaissance Technologies. In terms of the portfolio weights assigned to each position NewGen Asset Management allocated the biggest weight to BRP Inc. (NASDAQ:DOOO), around 3.7% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, setting aside 0.14 percent of its 13F equity portfolio to DOOO.

As one would reasonably expect, some big names have jumped into BRP Inc. (NASDAQ:DOOO) headfirst. NewGen Asset Management, managed by David Dattels, created the most valuable position in BRP Inc. (NASDAQ:DOOO). NewGen Asset Management had $9.8 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $0.4 million position during the quarter. The other funds with brand new DOOO positions are Donald Sussman’s Paloma Partners and Michael Gelband’s ExodusPoint Capital.

Let’s check out hedge fund activity in other stocks similar to BRP Inc. (NASDAQ:DOOO). These stocks are Eastgroup Properties Inc (NYSE:EGP), Stericycle Inc (NASDAQ:SRCL), Omnicell, Inc. (NASDAQ:OMCL), TopBuild Corp (NYSE:BLD), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), Columbia Sportswear Company (NASDAQ:COLM), and KT Corporation (NYSE:KT). This group of stocks’ market values are closest to DOOO’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $176 million in DOOO’s case. Columbia Sportswear Company (NASDAQ:COLM) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 11 bullish hedge fund positions. BRP Inc. (NASDAQ:DOOO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DOOO is 59.2. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on DOOO as the stock returned 17.3% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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