Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about The Brink’s Company (NYSE:BCO) in this article.
Is The Brink’s Company (NYSE:BCO) a safe stock to buy now? The best stock pickers are selling. The number of long hedge fund bets were cut by 2 recently. Our calculations also showed that BCO isn’t among the 30 most popular stocks among hedge funds. BCO was in 22 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 24 hedge funds in our database with BCO holdings at the end of the previous quarter.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s analyze the latest hedge fund action encompassing The Brink’s Company (NYSE:BCO).
What does the smart money think about The Brink’s Company (NYSE:BCO)?
At Q4’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in BCO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Deccan Value Advisors held the most valuable stake in The Brink’s Company (NYSE:BCO), which was worth $134.6 million at the end of the third quarter. On the second spot was P2 Capital Partners which amassed $128.8 million worth of shares. Moreover, Brahman Capital, Ariel Investments, and Marshall Wace LLP were also bullish on The Brink’s Company (NYSE:BCO), allocating a large percentage of their portfolios to this stock.
Judging by the fact that The Brink’s Company (NYSE:BCO) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that slashed their full holdings by the end of the third quarter. At the top of the heap, Matthew Sidman’s Three Bays Capital cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $68.1 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $26.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to The Brink’s Company (NYSE:BCO). These stocks are Allogene Therapeutics, Inc. (NASDAQ:ALLO), Chegg Inc (NYSE:CHGG), Apple Hospitality REIT Inc (NYSE:APLE), and TCF Financial Corporation (NYSE:TCF). This group of stocks’ market values match BCO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALLO | 10 | 130155 | 10 |
| CHGG | 21 | 380742 | 0 |
| APLE | 11 | 91271 | 1 |
| TCF | 23 | 264796 | -1 |
| Average | 16.25 | 216741 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $491 million in BCO’s case. TCF Financial Corporation (NYSE:TCF) is the most popular stock in this table. On the other hand Allogene Therapeutics, Inc. (NASDAQ:ALLO) is the least popular one with only 10 bullish hedge fund positions. The Brink’s Company (NYSE:BCO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on BCO, though not to the same extent, as the stock returned 24% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
