The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Global Brass and Copper Holdings Inc (NYSE:BRSS).
Is Global Brass and Copper Holdings Inc (NYSE:BRSS) undervalued? Investors who are in the know are absolutely becoming more confident. The number of long hedge fund investments strengthened by 4 lately. BRSS was in 18 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with BRSS holdings at the end of the previous quarter. At the end of this article we will also compare BRSS to other stocks including Agenus Inc (NASDAQ:AGEN), Lakeland Bancorp, Inc. (NASDAQ:LBAI), and Newpark Resources Inc (NYSE:NR) to get a better sense of its popularity.
Follow Global Brass & Copper Holdings Inc. (NYSE:BRSS)
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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How are hedge funds trading Global Brass and Copper Holdings Inc (NYSE:BRSS)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 29% increase from the second quarter of 2016. On the other hand, there were a total of 21 hedge funds with a bullish position in BRSS at the end of Q3 2015, so hedge fund ownership is still down over the past year. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in Global Brass and Copper Holdings Inc (NYSE:BRSS), worth close to $20.1 million. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with an $11.6 million position. Some other peers with similar optimism consist of Robert B. Gillam’s McKinley Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key money managers were leading the bulls’ herd. Royce & Associates, led by Chuck Royce, created the most valuable position in Global Brass and Copper Holdings Inc (NYSE:BRSS). Royce & Associates had $3.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3.1 million investment in the stock during the quarter. The other funds with brand new BRSS positions are Neil Chriss’ Hutchin Hill Capital, Matthew Hulsizer’s PEAK6 Capital Management, and Mike Vranos’ Ellington.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Global Brass and Copper Holdings Inc (NYSE:BRSS) but similarly valued. We will take a look at Agenus Inc (NASDAQ:AGEN), Lakeland Bancorp, Inc. (NASDAQ:LBAI), Newpark Resources Inc (NYSE:NR), and HomeStreet Inc (NASDAQ:HMST). All of these stocks’ market caps resemble BRSS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGEN | 12 | 95788 | 1 |
| LBAI | 8 | 17028 | 1 |
| NR | 12 | 43835 | -3 |
| HMST | 11 | 15773 | 0 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $64 million in BRSS’s case. Agenus Inc (NASDAQ:AGEN) is the most popular stock in this table. On the other hand Lakeland Bancorp, Inc. (NASDAQ:LBAI) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Global Brass and Copper Holdings Inc (NYSE:BRSS) 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
