The financial regulations require hedge funds and wealthy investors that exceeded 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 September 30th. 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 Briggs & Stratton Corporation (NYSE:BGG) based on those filings.
Is Briggs & Stratton Corporation (NYSE:BGG) worth your attention right now? The smart money is turning less bullish. The number of bullish hedge fund positions were cut by 1 lately. Our calculations also showed that BGG 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action encompassing Briggs & Stratton Corporation (NYSE:BGG).
How are hedge funds trading Briggs & Stratton Corporation (NYSE:BGG)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in BGG 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.
Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in Briggs & Stratton Corporation (NYSE:BGG). Millennium Management has a $4.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Millennium Management’s heels is D E Shaw, led by David E. Shaw, holding a $2.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Briggs & Stratton Corporation (NYSE:BGG), around 0.08% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to BGG.
Because Briggs & Stratton Corporation (NYSE:BGG) has faced falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Mike Vranos’s Ellington sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $0.3 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to Briggs & Stratton Corporation (NYSE:BGG). These stocks are Arlo Technologies, Inc. (NYSE:ARLO), Western New England Bancorp, Inc. (NASDAQ:WNEB), Alico, Inc. (NASDAQ:ALCO), and Albireo Pharma, Inc. (NASDAQ:ALBO). This group of stocks’ market valuations are closest to BGG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARLO | 11 | 25088 | -3 |
| WNEB | 5 | 23226 | 2 |
| ALCO | 6 | 18892 | 1 |
| ALBO | 11 | 54443 | -1 |
| Average | 8.25 | 30412 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $13 million in BGG’s case. Arlo Technologies, Inc. (NYSE:ARLO) is the most popular stock in this table. On the other hand Western New England Bancorp, Inc. (NASDAQ:WNEB) is the least popular one with only 5 bullish hedge fund positions. Briggs & Stratton Corporation (NYSE:BGG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 BGG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BGG were disappointed as the stock returned -11.7% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
