It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. 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 Blue Bird Corporation (NASDAQ:BLBD).
Blue Bird Corporation (NASDAQ:BLBD) was in 18 hedge funds’ portfolios at the end of September. BLBD investors should pay attention to a decrease in hedge fund interest of late. There were 20 hedge funds in our database with BLBD holdings at the end of the previous quarter. Our calculations also showed that BLBD isn’t among the 30 most popular stocks among hedge funds.
At the moment there are plenty of indicators stock traders put to use to size up their stock investments. A duo of the most underrated indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the market by a solid margin (see the details here).
We’re going to take a look at the latest hedge fund action surrounding Blue Bird Corporation (NASDAQ:BLBD).
How are hedge funds trading Blue Bird Corporation (NASDAQ:BLBD)?
Heading into the fourth quarter of 2018, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the second quarter of 2018. On the other hand, there were a total of 21 hedge funds with a bullish position in BLBD at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Blue Bird Corporation (NASDAQ:BLBD) was held by Osterweis Capital Management, which reported holding $55.1 million worth of stock at the end of September. It was followed by Spitfire Capital with a $35.4 million position. Other investors bullish on the company included Glazer Capital, Fir Tree, and Renaissance Technologies.
Due to the fact that Blue Bird Corporation (NASDAQ:BLBD) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Andrew Weiss’s Weiss Asset Management dumped the largest position of all the hedgies watched by Insider Monkey, totaling an estimated $20.5 million in stock, and John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co was right behind this move, as the fund sold off about $5.6 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Blue Bird Corporation (NASDAQ:BLBD). We will take a look at Pzena Investment Management Inc (NYSE:PZN), Timkensteel Corp (NYSE:TMST), Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW), and Boston Omaha Corporation (NASDAQ:BOMN). This group of stocks’ market valuations match BLBD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PZN | 4 | 12890 | -1 |
| TMST | 10 | 115386 | -3 |
| WIW | 3 | 2362 | 0 |
| BOMN | 4 | 215949 | -1 |
| Average | 5.25 | 86647 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $182 million in BLBD’s case. Timkensteel Corp (NYSE:TMST) is the most popular stock in this table. On the other hand Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Blue Bird Corporation (NASDAQ:BLBD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
