While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding BCE Inc. (NYSE:BCE).
Is BCE Inc. (NYSE:BCE) a buy here? Money managers are betting on the stock. The number of bullish hedge fund positions improved by 1 recently. Our calculations also showed that BCE isn’t among the 30 most popular stocks among hedge funds. BCE was in 17 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with BCE positions at the end of the previous quarter.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We’re going to analyze the latest hedge fund action surrounding BCE Inc. (NYSE:BCE).
Hedge fund activity in BCE Inc. (NYSE:BCE)
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BCE over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in BCE Inc. (NYSE:BCE). Renaissance Technologies has a $146.8 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $69.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Noam Gottesman’s GLG Partners and Israel Englander’s Millennium Management.
As aggregate interest increased, key hedge funds were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the most valuable call position in BCE Inc. (NYSE:BCE). PEAK6 Capital Management had $1.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.8 million position during the quarter. The other funds with brand new BCE positions are Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors and Frederick DiSanto’s Ancora Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BCE Inc. (NYSE:BCE) but similarly valued. These stocks are AFLAC Incorporated (NYSE:AFL), Marathon Petroleum Corp (NYSE:MPC), Fidelity National Information Services Inc. (NYSE:FIS), and Southwest Airlines Co. (NYSE:LUV). This group of stocks’ market valuations match BCE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFL | 29 | 922620 | 6 |
| MPC | 66 | 4796468 | 7 |
| FIS | 36 | 1952578 | 4 |
| LUV | 41 | 5209151 | 5 |
| Average | 43 | 3220204 | 5.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $3.22 billion. That figure was $345 million in BCE’s case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand AFLAC Incorporated (NYSE:AFL) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks BCE Inc. (NYSE:BCE) is even less popular than AFL. 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.
