Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Brown-Forman Corporation (NYSE:BF) in this article.
Brown-Forman Corporation (NYSE:BF) investors should pay attention to an increase in hedge fund sentiment lately. Brown-Forman Corporation (NYSE:BF) was in 35 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 29 hedge funds in our database with BF holdings at the end of December. Our calculations also showed that BF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most market participants, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are over 8000 funds with their doors open at the moment, We hone in on the upper echelon of this group, about 850 funds. It is estimated that this group of investors control most of the hedge fund industry’s total capital, and by keeping track of their top investments, Insider Monkey has discovered a few investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. Keeping this in mind we’re going to take a look at the key hedge fund action regarding Brown-Forman Corporation (NYSE:BF).
Do Hedge Funds Think BF Is A Good Stock To Buy Now?
At first quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BF over the last 23 quarters. 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 Insider Monkey’s hedge fund database, Terry Smith’s Fundsmith LLP has the number one position in Brown-Forman Corporation (NYSE:BF), worth close to $774.7 million, corresponding to 2.5% of its total 13F portfolio. On Fundsmith LLP’s heels is Tom Russo of Gardner Russo & Gardner, with a $189.9 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Tom Russo’s Gardner Russo & Gardner, Tom Gayner’s Markel Gayner Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Fundsmith LLP allocated the biggest weight to Brown-Forman Corporation (NYSE:BF), around 2.46% of its 13F portfolio. Gardner Russo & Gardner is also relatively very bullish on the stock, earmarking 1.73 percent of its 13F equity portfolio to BF.
Consequently, key hedge funds were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in Brown-Forman Corporation (NYSE:BF). Point72 Asset Management had $8.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $4.9 million investment in the stock during the quarter. The other funds with brand new BF positions are Jinghua Yan’s TwinBeech Capital, Brandon Haley’s Holocene Advisors, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks similar to Brown-Forman Corporation (NYSE:BF). These stocks are Suncor Energy Inc. (NYSE:SU), BeiGene, Ltd. (NASDAQ:BGNE), Archer Daniels Midland Company (NYSE:ADM), Motorola Solutions Inc (NYSE:MSI), Republic Services, Inc. (NYSE:RSG), Companhia Paranaense de Energia – COPEL (NYSE:ELP), and ArcelorMittal (NYSE:MT). This group of stocks’ market values are similar to BF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SU | 33 | 1047702 | 8 |
| BGNE | 19 | 6242377 | -2 |
| ADM | 34 | 696043 | -1 |
| MSI | 29 | 1000522 | -6 |
| RSG | 36 | 1073744 | 0 |
| ELP | 5 | 36122 | -4 |
| MT | 21 | 709788 | 3 |
| Average | 25.3 | 1543757 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $1544 million. That figure was $1477 million in BF’s case. Republic Services, Inc. (NYSE:RSG) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia – COPEL (NYSE:ELP) is the least popular one with only 5 bullish hedge fund positions. Brown-Forman Corporation (NYSE:BF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BF is 88.4. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on BF, though not to the same extent, as the stock returned 13.9% since Q1 (through June 25th) and outperformed the market as well.
Follow Brown Forman Corp (NYSE:BFA, BFB)
Follow Brown Forman Corp (NYSE:BFA, BFB)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 15 Fastest Growing Biotech Companies in the US
- 15 Biggest VR Companies In The World
Disclosure: None. This article was originally published at Insider Monkey.
