Insider Monkey has processed numerous 13F filings of hedge funds and successful investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of BGC Partners, Inc. (NASDAQ:BGCP) based on that data.
BGC Partners, Inc. (NASDAQ:BGCP) investors should be aware of an increase in support from the world’s most elite money managers lately. Our calculations also showed that BGCP isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a glance at the new hedge fund action encompassing BGC Partners, Inc. (NASDAQ:BGCP).
How are hedge funds trading BGC Partners, Inc. (NASDAQ:BGCP)?
At Q1’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BGCP over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Point72 Asset Management was the largest shareholder of BGC Partners, Inc. (NASDAQ:BGCP), with a stake worth $70.6 million reported as of the end of March. Trailing Point72 Asset Management was Cardinal Capital, which amassed a stake valued at $70.4 million. Rubric Capital Management, AQR Capital Management, and Alyeska Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers have jumped into BGC Partners, Inc. (NASDAQ:BGCP) headfirst. Soros Fund Management, managed by George Soros, assembled the most outsized position in BGC Partners, Inc. (NASDAQ:BGCP). Soros Fund Management had $7.8 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Roger Ibbotson’s Zebra Capital Management, David Harding’s Winton Capital Management, and Matthew Tewksbury’s Stevens Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BGC Partners, Inc. (NASDAQ:BGCP) but similarly valued. These stocks are TowneBank (NASDAQ:TOWN), Livent Corporation (NYSE:LTHM), Tenneco Inc (NYSE:TEN), and Varonis Systems Inc (NASDAQ:VRNS). This group of stocks’ market values are similar to BGCP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOWN | 7 | 33308 | -1 |
| LTHM | 25 | 358707 | 15 |
| TEN | 26 | 195221 | 1 |
| VRNS | 25 | 272768 | 4 |
| Average | 20.75 | 215001 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $253 million in BGCP’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 7 bullish hedge fund positions. BGC Partners, Inc. (NASDAQ:BGCP) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately BGCP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BGCP were disappointed as the stock returned -8% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
