Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Baker Hughes Company (NYSE:BKR).
Is Baker Hughes Company (NYSE:BKR) worth your attention right now? Prominent investors were becoming more confident. The number of bullish hedge fund positions rose by 7 in recent months. Baker Hughes Company (NYSE:BKR) was in 42 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BKR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 115 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.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 let’s take a glance at the fresh hedge fund action regarding Baker Hughes Company (NYSE:BKR).
Do Hedge Funds Think BKR Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in BKR a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Pzena Investment Management held the most valuable stake in Baker Hughes Company (NYSE:BKR), which was worth $484.6 million at the end of the fourth quarter. On the second spot was Iridian Asset Management which amassed $86.3 million worth of shares. Millennium Management, Balyasny Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position AltraVue Capital allocated the biggest weight to Baker Hughes Company (NYSE:BKR), around 5.2% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 1.97 percent of its 13F equity portfolio to BKR.
As aggregate interest increased, key hedge funds have jumped into Baker Hughes Company (NYSE:BKR) headfirst. Iridian Asset Management, managed by David Cohen and Harold Levy, created the most outsized position in Baker Hughes Company (NYSE:BKR). Iridian Asset Management had $86.3 million invested in the company at the end of the quarter. Renaissance Technologies also made a $46.1 million investment in the stock during the quarter. The following funds were also among the new BKR investors: Brandon Haley’s Holocene Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Baker Hughes Company (NYSE:BKR) but similarly valued. These stocks are Verisign, Inc. (NASDAQ:VRSN), Zillow Group Inc (NASDAQ:Z), Alexandria Real Estate Equities Inc (NYSE:ARE), FleetCor Technologies, Inc. (NYSE:FLT), Vulcan Materials Company (NYSE:VMC), EPAM Systems Inc (NYSE:EPAM), and EXACT Sciences Corporation (NASDAQ:EXAS). All of these stocks’ market caps resemble BKR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRSN | 42 | 5639028 | -5 |
| Z | 82 | 5732513 | -1 |
| ARE | 27 | 434248 | 13 |
| FLT | 39 | 1455035 | -5 |
| VMC | 48 | 1317475 | 4 |
| EPAM | 24 | 424015 | -8 |
| EXAS | 41 | 2408537 | 1 |
| Average | 43.3 | 2487264 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.3 hedge funds with bullish positions and the average amount invested in these stocks was $2487 million. That figure was $965 million in BKR’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand EPAM Systems Inc (NYSE:EPAM) is the least popular one with only 24 bullish hedge fund positions. Baker Hughes Company (NYSE:BKR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BKR is 55.5. 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 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on BKR, though not to the same extent, as the stock returned 5.6% since the end of Q1 (through June 18th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
