Hedge Funds Are Selling Blue Bird Corporation (BLBD)

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Blue Bird Corporation (NASDAQ:BLBD) makes for a good investment right now.

Blue Bird Corporation (NASDAQ:BLBD) shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. Blue Bird Corporation (NASDAQ:BLBD) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 22. Our calculations also showed that BLBD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. 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. Now we’re going to take a look at the key hedge fund action regarding Blue Bird Corporation (NASDAQ:BLBD).

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

At second quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in BLBD a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Blue Bird Corporation (NASDAQ:BLBD) was held by Lansdowne Partners, which reported holding $12.9 million worth of stock at the end of June. It was followed by Renaissance Technologies with a $9.9 million position. Other investors bullish on the company included Harvey Partners, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Blue Bird Corporation (NASDAQ:BLBD), around 2.41% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, setting aside 0.52 percent of its 13F equity portfolio to BLBD.

Because Blue Bird Corporation (NASDAQ:BLBD) has faced bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes by the end of the second quarter. It’s worth mentioning that Israel Englander’s Millennium Management dumped the largest stake of all the hedgies watched by Insider Monkey, totaling close to $3.4 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $3.1 million worth. These transactions are important to note, as total hedge fund interest dropped by 3 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to Blue Bird Corporation (NASDAQ:BLBD). We will take a look at Vasta Platform Limited (NASDAQ:VSTA), Carriage Services, Inc. (NYSE:CSV), CBTX, Inc. (NASDAQ:CBTX), PDF Solutions, Inc. (NASDAQ:PDFS), ChromaDex Corporation (NASDAQ:CDXC), Heritage Commerce Corp. (NASDAQ:HTBK), and Qiwi PLC (NASDAQ:QIWI). This group of stocks’ market values match BLBD’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $32 million in BLBD’s case. PDF Solutions, Inc. (NASDAQ:PDFS) is the most popular stock in this table. On the other hand Vasta Platform Limited (NASDAQ:VSTA) is the least popular one with only 3 bullish hedge fund positions. Blue Bird Corporation (NASDAQ:BLBD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BLBD is 50.6. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately BLBD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BLBD were disappointed as the stock returned -14.3% since the end of June (through 9/27) 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.