Is Brookfield Asset Management Inc. (BAM) Going to Burn These Hedge Funds?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Brookfield Asset Management Inc. (NYSE:BAM).

Brookfield Asset Management Inc. (NYSE:BAM) was in 32 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. BAM has seen a decrease in activity from the world’s largest hedge funds recently. There were 34 hedge funds in our database with BAM holdings at the end of June. Our calculations also showed that BAM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Tom Gayner of Markel Gayner Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to view the key hedge fund action surrounding Brookfield Asset Management Inc. (NYSE:BAM).

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

At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. By comparison, 35 hedge funds held shares or bullish call options in BAM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Viking Global held the most valuable stake in Brookfield Asset Management Inc. (NYSE:BAM), which was worth $909 million at the end of the third quarter. On the second spot was Akre Capital Management which amassed $702.4 million worth of shares. Markel Gayner Asset Management, Horizon Asset Management, and Greenlea Lane 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 Greenlea Lane Capital allocated the biggest weight to Brookfield Asset Management Inc. (NYSE:BAM), around 15.23% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 5.97 percent of its 13F equity portfolio to BAM.

Judging by the fact that Brookfield Asset Management Inc. (NYSE:BAM) has faced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of funds that elected to cut their full holdings heading into Q4. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $10.4 million in call options, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $8.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Brookfield Asset Management Inc. (NYSE:BAM) but similarly valued. These stocks are Mercadolibre Inc (NASDAQ:MELI), The Blackstone Group Inc. (NYSE:BX), PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), Mondelez International Inc (NASDAQ:MDLZ), and British American Tobacco plc (NYSE:BTI). All of these stocks’ market caps are closest to BAM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $2518 million. That figure was $2499 million in BAM’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Brookfield Asset Management Inc. (NYSE:BAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BAM is 47.8. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately BAM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BAM investors were disappointed as the stock returned 5.2% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.

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