Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Briggs & Stratton Corporation (NYSE:BGG) worth your attention right now? The best stock pickers are altogether betting on the stock. The number of long hedge fund bets strengthened by 1 recently. There were 19 hedge funds in our database with BGG positions at the end of the third 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 American Railcar Industries, Inc. (NASDAQ:ARII), Aduro BioTech Inc (NASDAQ:ADRO), and Veritiv Corp (NYSE:VRTV) 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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How are hedge funds trading Briggs & Stratton Corporation (NYSE:BGG)?
Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BGG over the last 5 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daruma Asset Management, led by Mariko Gordon, holds the number one position in Briggs & Stratton Corporation (NYSE:BGG). Daruma Asset Management has a $40.6 million position in the stock, comprising 2.5% of its 13F portfolio. Sitting at the No. 2 spot is GMT Capital, led by Thomas E. Claugus, which holds a $14.1 million position. Some other hedge funds and institutional investors that hold long positions comprise Israel Englander’s Millennium Management, Joseph A. Jolson’s Harvest Capital Strategies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. 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.
Consequently, some big names have been driving this bullishness. Jim Simons’ Renaissance Technologies assembled the most outsized position in Briggs & Stratton Corporation (NYSE:BGG). Renaissance Technologies had $2.7 million invested in the company at the end of the quarter. Mark Coe’s Coe Capital Management also initiated a $0.9 million position during the quarter. The only other fund with a brand new BGG position is George Hall’s Clinton Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Briggs & Stratton Corporation (NYSE:BGG) but similarly valued. These stocks are American Railcar Industries, Inc. (NASDAQ:ARII), Aduro BioTech Inc (NASDAQ:ADRO), Veritiv Corp (NYSE:VRTV), and Denny’s Corporation (NASDAQ:DENN). All of these stocks’ market caps match BGG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARII | 16 | 522934 | 5 |
| ADRO | 6 | 16305 | -1 |
| VRTV | 12 | 164474 | 4 |
| DENN | 13 | 75265 | -2 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $95 million in BGG’s case. American Railcar Industries, Inc. (NASDAQ:ARII) is the most popular stock in this table. On the other hand Aduro BioTech Inc (NASDAQ:ADRO) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Briggs & Stratton Corporation (NYSE:BGG) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
