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 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Brown-Forman Corporation (NYSE:BF)?
Brown-Forman Corporation (NYSE:BF) shareholders have witnessed an increase in enthusiasm from smart money of late. BF was in 28 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with BF holdings at the end of the previous quarter. Our calculations also showed that BF 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.
In the eyes of most market participants, hedge funds are perceived as underperforming, old financial vehicles of yesteryear. While there are greater than 8000 funds trading today, Our experts look at the masters of this group, approximately 850 funds. These investment experts orchestrate most of all hedge funds’ total asset base, and by keeping an eye on their best investments, Insider Monkey has revealed various investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the key hedge fund action surrounding Brown-Forman Corporation (NYSE:BF).
How have hedgies been trading Brown-Forman Corporation (NYSE:BF)?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BF over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Brown-Forman Corporation (NYSE:BF) was held by Gardner Russo & Gardner, which reported holding $189.3 million worth of stock at the end of September. It was followed by Gardner Russo & Gardner with a $90.7 million position. Other investors bullish on the company included Markel Gayner Asset Management, GAMCO Investors, and AQR Capital Management. In terms of the portfolio weights assigned to each position Gardner Russo & Gardner allocated the biggest weight to Brown-Forman Corporation (NYSE:BF), around 1.91% of its 13F portfolio. Gardner Russo & Gardner is also relatively very bullish on the stock, designating 0.92 percent of its 13F equity portfolio to BF.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in Brown-Forman Corporation (NYSE:BF). D E Shaw had $2.3 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Sander Gerber’s Hudson Bay Capital Management, and Ray Dalio’s Bridgewater Associates.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Brown-Forman Corporation (NYSE:BF) but similarly valued. These stocks are Cognizant Technology Solutions Corp (NASDAQ:CTSH), Travelers Companies Inc (NYSE:TRV), DuPont de Nemours Inc (NYSE:DD), and Hormel Foods Corporation (NYSE:HRL). This group of stocks’ market values resemble BF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTSH | 38 | 2225496 | -5 |
| TRV | 29 | 481539 | -10 |
| DD | 54 | 2411525 | -14 |
| HRL | 28 | 276267 | 5 |
| Average | 37.25 | 1348707 | -6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $1349 million. That figure was $482 million in BF’s case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Brown-Forman Corporation (NYSE:BF) is even less popular than HRL. Hedge funds dodged a bullet by taking a bearish stance towards BF. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately BF wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BF investors were disappointed as the stock returned 15.5% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Follow Brown Forman Corp (NYSE:BFA, BFB)
Follow Brown Forman Corp (NYSE:BFA, BFB)
Disclosure: None. This article was originally published at Insider Monkey.
