While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Balchem Corporation (NASDAQ:BCPC).
Is Balchem Corporation (NASDAQ:BCPC) going to take off soon? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets increased by 3 lately. Our calculations also showed that BCPC isn’t among the 30 most popular stocks among hedge funds. BCPC was in 11 hedge funds’ portfolios at the end of December. There were 8 hedge funds in our database with BCPC holdings at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to analyze the key hedge fund action regarding Balchem Corporation (NASDAQ:BCPC).
What have hedge funds been doing with Balchem Corporation (NASDAQ:BCPC)?
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in BCPC 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in Balchem Corporation (NASDAQ:BCPC), worth close to $22.6 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $21.9 million position; 0.2% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions contain Murray Stahl’s Horizon Asset Management, Lee Ainslie’s Maverick Capital and D. E. Shaw’s D E Shaw.
Consequently, key hedge funds were breaking ground themselves. Maverick Capital, managed by Lee Ainslie, assembled the biggest position in Balchem Corporation (NASDAQ:BCPC). Maverick Capital had $3.1 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Balchem Corporation (NASDAQ:BCPC). These stocks are American Equity Investment Life Holding Company (NYSE:AEL), Floor & Decor Holdings, Inc. (NYSE:FND), Univar Inc (NYSE:UNVR), and Altus Midstream Company (NASDAQ:ALTM). All of these stocks’ market caps match BCPC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEL | 17 | 112145 | 4 |
| FND | 19 | 213377 | -6 |
| UNVR | 23 | 701477 | -10 |
| ALTM | 5 | 41552 | -11 |
| Average | 16 | 267138 | -5.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $57 million in BCPC’s case. Univar Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Altus Midstream Company (NASDAQ:ALTM) is the least popular one with only 5 bullish hedge fund positions. Balchem Corporation (NASDAQ:BCPC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on BCPC, though not to the same extent, as the stock returned 23.9% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
