We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like BMC Stock Holdings, Inc. (NASDAQ:BMCH).
BMC Stock Holdings, Inc. (NASDAQ:BMCH) has seen an increase in enthusiasm from smart money recently. BMCH was in 27 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with BMCH holdings at the end of the previous quarter. Our calculations also showed that BMCH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are several methods stock traders put to use to analyze publicly traded companies. A duo of the best methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the market by a healthy amount (see the details here).
Chuck Royce of Royce & Associates
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the key hedge fund action encompassing BMC Stock Holdings, Inc. (NASDAQ:BMCH).
How are hedge funds trading BMC Stock Holdings, Inc. (NASDAQ:BMCH)?
Heading into the fourth quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in BMCH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Coliseum Capital, managed by Christopher Shackelton and Adam Gray, holds the largest position in BMC Stock Holdings, Inc. (NASDAQ:BMCH). Coliseum Capital has a $82.3 million position in the stock, comprising 23% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, with a $34.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish include William C. Martin’s Raging Capital Management, Richard S. Meisenberg’s ACK Asset Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Coliseum Capital allocated the biggest weight to BMC Stock Holdings, Inc. (NASDAQ:BMCH), around 23.03% of its portfolio. Soapstone Capital is also relatively very bullish on the stock, earmarking 6.06 percent of its 13F equity portfolio to BMCH.
Consequently, key hedge funds were breaking ground themselves. PDT Partners, managed by Peter Muller, initiated the biggest position in BMC Stock Holdings, Inc. (NASDAQ:BMCH). PDT Partners had $1.5 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $1.4 million position during the quarter. The following funds were also among the new BMCH investors: Matthew Hulsizer’s PEAK6 Capital Management, Ken Griffin’s Citadel Investment Group, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BMC Stock Holdings, Inc. (NASDAQ:BMCH) but similarly valued. These stocks are Constellium SE (NYSE:CSTM), iRobot Corporation (NASDAQ:IRBT), Trinseo S.A. (NYSE:TSE), and Bottomline Technologies (NASDAQ:EPAY). This group of stocks’ market values are similar to BMCH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSTM | 43 | 412365 | 6 |
| IRBT | 11 | 52517 | 2 |
| TSE | 13 | 85449 | -10 |
| EPAY | 19 | 85411 | 3 |
| Average | 21.5 | 158936 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $287 million in BMCH’s case. Constellium SE (NYSE:CSTM) is the most popular stock in this table. On the other hand iRobot Corporation (NASDAQ:IRBT) is the least popular one with only 11 bullish hedge fund positions. BMC Stock Holdings, Inc. (NASDAQ:BMCH) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on BMCH as the stock returned 13.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
