We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Broadridge Financial Solutions, Inc. (NYSE:BR).
Broadridge Financial Solutions, Inc. (NYSE:BR) was in 27 hedge funds’ portfolios at the end of the third quarter of 2019. BR investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 21 hedge funds in our database with BR positions at the end of the previous quarter. Our calculations also showed that BR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most investors, hedge funds are assumed to be underperforming, old financial vehicles of years past. While there are more than 8000 funds trading today, We hone in on the top tier of this group, about 750 funds. Most estimates calculate that this group of people preside over most of the hedge fund industry’s total capital, and by keeping an eye on their finest investments, Insider Monkey has determined several investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Cliff Asness of AQR Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the latest hedge fund action surrounding Broadridge Financial Solutions, Inc. (NYSE:BR).
How are hedge funds trading Broadridge Financial Solutions, Inc. (NYSE:BR)?
Heading into the fourth quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the second quarter of 2019. By comparison, 33 hedge funds held shares or bullish call options in BR 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.
More specifically, Junto Capital Management was the largest shareholder of Broadridge Financial Solutions, Inc. (NYSE:BR), with a stake worth $53.5 million reported as of the end of September. Trailing Junto Capital Management was AQR Capital Management, which amassed a stake valued at $48.8 million. Bristol Gate Capital Partners, Diamond Hill Capital, 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 Strycker View Capital allocated the biggest weight to Broadridge Financial Solutions, Inc. (NYSE:BR), around 9.87% of its portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, earmarking 4.25 percent of its 13F equity portfolio to BR.
Consequently, key hedge funds have been driving this bullishness. Junto Capital Management, managed by James Parsons, assembled the most valuable position in Broadridge Financial Solutions, Inc. (NYSE:BR). Junto Capital Management had $53.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $27.3 million investment in the stock during the quarter. The following funds were also among the new BR investors: John Overdeck and David Siegel’s Two Sigma Advisors, Anand Parekh’s Alyeska Investment Group, and David E. Shaw’s D E Shaw.
Let’s now take a look at hedge fund activity in other stocks similar to Broadridge Financial Solutions, Inc. (NYSE:BR). These stocks are Seagate Technology plc (NASDAQ:STX), UDR, Inc. (NYSE:UDR), Banco de Chile (NYSE:BCH), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO). All of these stocks’ market caps are closest to BR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STX | 26 | 2311475 | 3 |
| UDR | 21 | 560389 | 5 |
| BCH | 4 | 66263 | -2 |
| TTWO | 57 | 1596551 | -3 |
| Average | 27 | 1133670 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1134 million. That figure was $313 million in BR’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 4 bullish hedge fund positions. Broadridge Financial Solutions, Inc. (NYSE:BR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BR investors were disappointed as the stock returned -0.6% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
