World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is BHP Billiton plc (ADR) (NYSE:BBL) an attractive investment right now? Money managers are actually taking a pessimistic view. The number of bullish hedge fund positions experienced a decline of 1 lately. BBL was in 18 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with BBL holdings at the end of the previous quarter. 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 Simon Property Group, Inc (NYSE:SPG), Colgate-Palmolive Company (NYSE:CL), and Texas Instruments Incorporated (NASDAQ:TXN) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in BHP Billiton plc (ADR) (NYSE:BBL)
Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BBL over the last 5 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Bernard Horn’s Polaris Capital Management holds the biggest position in BHP Billiton plc (ADR) (NYSE:BBL). Polaris Capital Management has a $120.2 million position in the stock, comprising 9.4% of its 13F portfolio. The second most bullish fund manager is Noam Gottesman of GLG Partners, with a $54.8 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise Shane Finemore’s Manikay Partners, Israel Englander’s Millennium Management and Paul Singer’s Elliott Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because BHP Billiton plc (ADR) (NYSE:BBL) has sustained declining sentiment from hedge fund managers, it’s easy to see that there were a few hedge funds that decided to sell off their full holdings heading into fourth quarter. Interestingly, Jim Simons’ Renaissance Technologies sold off the largest stake of the “upper crust” of funds studied by Insider Monkey, valued at an estimated $15.1 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund cut about $0.8 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BHP Billiton plc (ADR) (NYSE:BBL) but similarly valued. We will take a look at Simon Property Group, Inc (NYSE:SPG), Colgate-Palmolive Company (NYSE:CL), Texas Instruments Incorporated (NASDAQ:TXN), and Canon Inc. (ADR) (NYSE:CAJ). All of these stocks’ market caps are similar to BBL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPG | 20 | 893010 | -1 |
| CL | 38 | 1877260 | 2 |
| TXN | 37 | 943996 | 6 |
| CAJ | 5 | 36687 | -1 |
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $938 million. That figure was $324 million in BBL’s case. Colgate-Palmolive Company (NYSE:CL) is the most popular stock in this table. On the other hand Canon Inc. (ADR) (NYSE:CAJ) is the least popular one with only 5 bullish hedge fund positions. BHP Billiton plc (ADR) (NYSE:BBL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CL might be a better candidate to consider taking a long position in.
Disclosure: None
