We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Brown & Brown, Inc. (NYSE:BRO) based on that data.
Hedge fund interest in Brown & Brown, Inc. (NYSE:BRO) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as DocuSign, Inc. (NASDAQ:DOCU), Fluor Corporation (NYSE:FLR), and Guidewire Software Inc (NYSE:GWRE) to gather more data points.
Today there are several methods shareholders have at their disposal to assess publicly traded companies. Two of the less known methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a solid margin (see the details here).
Let’s go over the latest hedge fund action regarding Brown & Brown, Inc. (NYSE:BRO).
How have hedgies been trading Brown & Brown, Inc. (NYSE:BRO)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. The graph below displays the number of hedge funds with bullish position in BRO over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Brown & Brown, Inc. (NYSE:BRO), with a stake worth $244.2 million reported as of the end of September. Trailing Select Equity Group was Renaissance Technologies, which amassed a stake valued at $150.4 million. Arrowstreet Capital, Polar Capital, and Diamond Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Brown & Brown, Inc. (NYSE:BRO) has experienced a decline in interest from the smart money, logic holds that there were a few funds who sold off their positions entirely in the third quarter. At the top of the heap, Chuck Royce’s Royce & Associates dropped the biggest position of all the hedgies followed by Insider Monkey, worth close to $3.3 million in stock, and Alec Litowitz and Ross Laser’s Magnetar Capital was right behind this move, as the fund cut about $0.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Brown & Brown, Inc. (NYSE:BRO). We will take a look at DocuSign, Inc. (NASDAQ:DOCU), Fluor Corporation (NYSE:FLR), Guidewire Software Inc (NYSE:GWRE), and CDK Global Inc (NASDAQ:CDK). This group of stocks’ market values are closest to BRO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOCU | 37 | 582881 | 17 |
| FLR | 23 | 367123 | 1 |
| GWRE | 32 | 464652 | 14 |
| CDK | 30 | 957372 | 1 |
| Average | 30.5 | 593007 | 8.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $593 million. That figure was $716 million in BRO’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand Fluor Corporation (NYSE:FLR) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Brown & Brown, Inc. (NYSE:BRO) is even less popular than FLR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
