Is BCO Stock A Buy or Sell?

In this article we will check out the progression of hedge fund sentiment towards The Brink’s Company (NYSE:BCO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is BCO stock a buy? The Brink’s Company (NYSE:BCO) was in 26 hedge funds’ portfolios at the end of December. The all time high for this statistic is 28. BCO has experienced a decrease in hedge fund interest of late. There were 28 hedge funds in our database with BCO positions at the end of the third quarter. Our calculations also showed that BCO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s take a look at the new hedge fund action surrounding The Brink’s Company (NYSE:BCO).

Do Hedge Funds Think BCO Is A Good Stock To Buy Now?

At Q4’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in BCO a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

More specifically, P2 Capital Partners was the largest shareholder of The Brink’s Company (NYSE:BCO), with a stake worth $141.7 million reported as of the end of December. Trailing P2 Capital Partners was Ariel Investments, which amassed a stake valued at $119.8 million. Brahman Capital, Clearline Capital, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position P2 Capital Partners allocated the biggest weight to The Brink’s Company (NYSE:BCO), around 9.61% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, setting aside 5.93 percent of its 13F equity portfolio to BCO.

Because The Brink’s Company (NYSE:BCO) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds who were dropping their entire stakes heading into Q1. It’s worth mentioning that Barry Rosenstein’s JANA Partners said goodbye to the biggest investment of the 750 funds tracked by Insider Monkey, totaling about $20.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $14 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q1.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Brink’s Company (NYSE:BCO) but similarly valued. We will take a look at ShockWave Medical, Inc. (NASDAQ:SWAV), Cohen & Steers, Inc. (NYSE:CNS), DouYu International Holdings Limited (NASDAQ:DOYU), Allogene Therapeutics, Inc. (NASDAQ:ALLO), CIT Group Inc. (NYSE:CIT), SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), and EnerSys (NYSE:ENS). This group of stocks’ market valuations are closest to BCO’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $413 million in BCO’s case. CIT Group Inc. (NYSE:CIT) is the most popular stock in this table. On the other hand Cohen & Steers, Inc. (NYSE:CNS) is the least popular one with only 15 bullish hedge fund positions. The Brink’s Company (NYSE:BCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BCO is 65.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately BCO wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on BCO were disappointed as the stock returned 10% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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