Is BRP Group, Inc. (NASDAQ:BRP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is BRP a good stock to buy now? The best stock pickers were becoming less confident. The number of bullish hedge fund bets went down by 6 recently. BRP Group, Inc. (NASDAQ:BRP) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that BRP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 16 hedge funds in our database with BRP positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus Capital
With all of this in mind let’s analyze the recent hedge fund action surrounding BRP Group, Inc. (NASDAQ:BRP).
Do Hedge Funds Think BRP Is A Good Stock To Buy Now?
At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the second quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in BRP 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, Driehaus Capital held the most valuable stake in BRP Group, Inc. (NASDAQ:BRP), which was worth $22.6 million at the end of the third quarter. On the second spot was Guardian Point Capital which amassed $13.7 million worth of shares. Arrowstreet Capital, Millennium Management, and Citadel Investment Group 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 Guardian Point Capital allocated the biggest weight to BRP Group, Inc. (NASDAQ:BRP), around 4.78% of its 13F portfolio. Toscafund Asset Management is also relatively very bullish on the stock, dishing out 1.22 percent of its 13F equity portfolio to BRP.
Due to the fact that BRP Group, Inc. (NASDAQ:BRP) has faced falling interest from the smart money, logic holds that there is a sect of hedgies that decided to sell off their full holdings in the third quarter. At the top of the heap, Peter S. Park’s Park West Asset Management dropped the biggest position of all the hedgies tracked by Insider Monkey, worth close to $14.7 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dropped its stock, about $4.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 6 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BRP Group, Inc. (NASDAQ:BRP) but similarly valued. We will take a look at Materialise NV (NASDAQ:MTLS), FS KKR Capital Corp. (NASDAQ:FSK), Sprout Social, Inc. (NASDAQ:SPT), Osisko Gold Royalties Ltd (NYSE:OR), Tower Semiconductor Ltd. (NASDAQ:TSEM), Olin Corporation (NYSE:OLN), and Eidos Therapeutics, Inc. (NASDAQ:EIDX). All of these stocks’ market caps are similar to BRP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTLS | 5 | 7404 | 1 |
| FSK | 11 | 89179 | 0 |
| SPT | 18 | 126704 | -1 |
| OR | 17 | 243791 | 2 |
| TSEM | 14 | 295737 | -1 |
| OLN | 33 | 459651 | 0 |
| EIDX | 13 | 254264 | -4 |
| Average | 15.9 | 210961 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $46 million in BRP’s case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand Materialise NV (NASDAQ:MTLS) is the least popular one with only 5 bullish hedge fund positions. BRP Group, Inc. (NASDAQ:BRP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BRP is 26.7. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BRP as the stock returned 28.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.