In this article we will take a look at whether hedge funds think Booz Allen Hamilton Holding Corporation (NYSE:BAH) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is BAH a good stock to buy? Prominent investors were taking a bullish view. The number of bullish hedge fund bets rose by 2 recently. Booz Allen Hamilton Holding Corporation (NYSE:BAH) was in 29 hedge funds’ portfolios at the end of March. The all time high for this statistic is 35. Our calculations also showed that BAH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 27 hedge funds in our database with BAH positions at the end of the fourth quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bruce Kovner of Caxton Associates LP
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Do Hedge Funds Think BAH Is A Good Stock To Buy Now?
At first quarter’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BAH over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the biggest position in Booz Allen Hamilton Holding Corporation (NYSE:BAH), worth close to $53.3 million, accounting for 0.1% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, managed by Cliff Asness, which holds a $51.2 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Game Creek Capital allocated the biggest weight to Booz Allen Hamilton Holding Corporation (NYSE:BAH), around 2.92% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, earmarking 0.35 percent of its 13F equity portfolio to BAH.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Sandbar Asset Management, managed by Michael Cowley, created the most valuable position in Booz Allen Hamilton Holding Corporation (NYSE:BAH). Sandbar Asset Management had $2.3 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also initiated a $0.8 million position during the quarter. The other funds with brand new BAH positions are Paul Tudor Jones’s Tudor Investment Corp, Bruce Kovner’s Caxton Associates LP, and Peter Muller’s PDT Partners.
Let’s now review hedge fund activity in other stocks similar to Booz Allen Hamilton Holding Corporation (NYSE:BAH). We will take a look at BorgWarner Inc. (NYSE:BWA), Zynga Inc (NASDAQ:ZNGA), Dropbox, Inc. (NASDAQ:DBX), Cable One Inc (NYSE:CABO), Camden Property Trust (NYSE:CPT), Essential Utilities Inc (NYSE:WTRG), and A. O. Smith Corporation (NYSE:AOS). All of these stocks’ market caps match BAH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BWA | 27 | 590548 | 0 |
| ZNGA | 47 | 1143096 | -5 |
| DBX | 31 | 775813 | -12 |
| CABO | 23 | 694559 | 6 |
| CPT | 24 | 614554 | -2 |
| WTRG | 19 | 266338 | 6 |
| AOS | 24 | 420942 | -7 |
| Average | 27.9 | 643693 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $644 million. That figure was $179 million in BAH’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Essential Utilities Inc (NYSE:WTRG) is the least popular one with only 19 bullish hedge fund positions. Booz Allen Hamilton Holding Corporation (NYSE:BAH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BAH is 49.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately BAH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BAH were disappointed as the stock returned 8.2% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Booz Allen Hamilton Holding Corp (NYSE:BAH)
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Disclosure: None. This article was originally published at Insider Monkey.
