Is BKR Stock A Buy or Sell?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value 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 fourth quarter. You can find articles 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 over the last 5 years and analyze what the smart money thinks of Baker Hughes Company (NYSE:BKR) based on that data.

Is BKR stock a buy? Baker Hughes Company (NYSE:BKR) has experienced an increase in hedge fund sentiment recently. Baker Hughes Company (NYSE:BKR) was in 35 hedge funds’ portfolios at the end of December. The all time high for this statistic is 37. Our calculations also showed that BKR 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).

Richard S. Pzena of Pzena Investment Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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 check out the recent hedge fund action regarding Baker Hughes Company (NYSE:BKR).

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

At Q4’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 37 hedge funds with a bullish position in BKR a year ago. 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, Pzena Investment Management was the largest shareholder of Baker Hughes Company (NYSE:BKR), with a stake worth $493.4 million reported as of the end of December. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $76.4 million. Millennium Management, Point72 Asset Management, and AltraVue Capital 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 AltraVue Capital allocated the biggest weight to Baker Hughes Company (NYSE:BKR), around 5.25% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, dishing out 2.33 percent of its 13F equity portfolio to BKR.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Bourgeon Capital, managed by John Zaro, created the biggest position in Baker Hughes Company (NYSE:BKR). Bourgeon Capital had $2.6 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Ray Dalio’s Bridgewater Associates, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Baker Hughes Company (NYSE:BKR) but similarly valued. These stocks are Kellogg Company (NYSE:K), Telefonica S.A. (NYSE:TEF), Magna International Inc. (NYSE:MGA), Altice USA, Inc. (NYSE:ATUS), CBRE Group, Inc. (NYSE:CBRE), West Pharmaceutical Services Inc. (NYSE:WST), and United Microelectronics Corp (NYSE:UMC). This group of stocks’ market valuations resemble BKR’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $1211 million. That figure was $695 million in BKR’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. Baker Hughes Company (NYSE:BKR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BKR is 67.8. 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 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately BKR wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on BKR were disappointed as the stock returned 5.1% since the end of December (through 4/1) 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.