We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 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 BCE Inc. (NYSE:BCE).
BCE Inc. (NYSE:BCE) investors should pay attention to a decrease in enthusiasm from smart money lately. BCE was in 14 hedge funds’ portfolios at the end of June. There were 16 hedge funds in our database with BCE holdings at the end of the previous quarter. Our calculations also showed that BCE isn’t among the 30 most popular stocks among hedge funds (see the video below).
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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. Let’s take a glance at the fresh hedge fund action regarding BCE Inc. (NYSE:BCE).
What have hedge funds been doing with BCE Inc. (NYSE:BCE)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BCE over the last 16 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.
Among these funds, Renaissance Technologies held the most valuable stake in BCE Inc. (NYSE:BCE), which was worth $137.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $124.4 million worth of shares. Moreover, GLG Partners, Two Sigma Advisors, and Bridgewater Associates were also bullish on BCE Inc. (NYSE:BCE), allocating a large percentage of their portfolios to this stock.
Since BCE Inc. (NYSE:BCE) has faced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of hedgies who sold off their full holdings by the end of the second quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dumped the biggest position of the 750 funds monitored by Insider Monkey, totaling about $1 million in stock. Michael Platt and William Reeves’s fund, BlueCrest Capital Mgmt., also sold off its stock, about $0.5 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the second quarter.
Let’s also examine hedge fund activity in other stocks similar to BCE Inc. (NYSE:BCE). We will take a look at Orange S.A. (NYSE:ORAN), L3Harris Technologies, Inc. (NYSE:LHX), Prudential Financial Inc (NYSE:PRU), and Emerson Electric Co. (NYSE:EMR). This group of stocks’ market caps are closest to BCE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORAN | 2 | 1488 | 0 |
| LHX | 30 | 770043 | 5 |
| PRU | 33 | 512084 | 2 |
| EMR | 32 | 638009 | -12 |
| Average | 24.25 | 480406 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $480 million. That figure was $365 million in BCE’s case. Prudential Financial Inc (NYSE:PRU) is the most popular stock in this table. On the other hand Orange S.A. (NYSE:ORAN) is the least popular one with only 2 bullish hedge fund positions. BCE Inc. (NYSE:BCE) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on BCE as the stock returned 7.8% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
