The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Booz Allen Hamilton Holding Corporation (NYSE:BAH) based on those filings.
Is Booz Allen Hamilton Holding Corporation (NYSE:BAH) a bargain? Prominent investors are taking a bullish view. The number of bullish hedge fund positions increased by 12 recently. Our calculations also showed that BAH isn’t among the 30 most popular stocks among hedge funds (view the video below). BAH was in 31 hedge funds’ portfolios at the end of the second quarter of 2019. There were 19 hedge funds in our database with BAH holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the new hedge fund action surrounding Booz Allen Hamilton Holding Corporation (NYSE:BAH).
How are hedge funds trading Booz Allen Hamilton Holding Corporation (NYSE:BAH)?
Heading into the third quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 63% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in BAH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Anna Nikolayevsky of Axel Capital
More specifically, Arrowstreet Capital was the largest shareholder of Booz Allen Hamilton Holding Corporation (NYSE:BAH), with a stake worth $89.3 million reported as of the end of March. Trailing Arrowstreet Capital was Polar Capital, which amassed a stake valued at $75.7 million. AQR Capital Management, Two Sigma Advisors, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in Booz Allen Hamilton Holding Corporation (NYSE:BAH). Marshall Wace LLP had $18.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $7.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Anna Nikolayevsky’s Axel Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Booz Allen Hamilton Holding Corporation (NYSE:BAH). We will take a look at American Financial Group, Inc. (NYSE:AFG), Ubiquiti Networks Inc (NASDAQ:UBNT), Juniper Networks, Inc. (NYSE:JNPR), and Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). This group of stocks’ market caps resemble BAH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFG | 22 | 366752 | -8 |
| UBNT | 17 | 505790 | 0 |
| JNPR | 28 | 700453 | 4 |
| IONS | 18 | 374673 | -4 |
| Average | 21.25 | 486917 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $487 million. That figure was $369 million in BAH’s case. Juniper Networks, Inc. (NYSE:JNPR) is the most popular stock in this table. On the other hand Ubiquiti Networks Inc (NASDAQ:UBNT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Booz Allen Hamilton Holding Corporation (NYSE:BAH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BAH as the stock returned 7.6% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
