We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 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’ 2018 losses in Facebook and Apple. 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 worthy stock to buy now? Prominent investors are getting more optimistic. The number of long hedge fund positions improved by 3 lately. Our calculations also showed that BCO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). BCO was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 21 hedge funds in our database with BCO positions at the end of the previous quarter.
To most market participants, hedge funds are assumed to be unimportant, old financial tools of years past. While there are more than 8000 funds with their doors open at present, Our researchers choose to focus on the crème de la crème of this club, around 850 funds. These money managers handle the lion’s share of the smart money’s total asset base, and by paying attention to their inimitable investments, Insider Monkey has unearthed a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Harold Levy of Iridian Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the new hedge fund action regarding The Brink’s Company (NYSE:BCO).
What does smart money think about The Brink’s Company (NYSE:BCO)?
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BCO over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, P2 Capital Partners held the most valuable stake in The Brink’s Company (NYSE:BCO), which was worth $149.1 million at the end of the third quarter. On the second spot was Iridian Asset Management which amassed $123.3 million worth of shares. Ariel Investments, Brahman Capital, and Park West Asset Management 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 P2 Capital Partners allocated the biggest weight to The Brink’s Company (NYSE:BCO), around 10.94% of its 13F portfolio. Concourse Capital Management is also relatively very bullish on the stock, setting aside 4.41 percent of its 13F equity portfolio to BCO.
Consequently, some big names were leading the bulls’ herd. 12th Street Asset Management, managed by Michael O’Keefe, assembled the most outsized position in The Brink’s Company (NYSE:BCO). 12th Street Asset Management had $3 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $1.8 million position during the quarter. The following funds were also among the new BCO investors Renaissance Technologies, Qing Li’s Sciencast Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Brink’s Company (NYSE:BCO) but similarly valued. We will take a look at PS Business Parks Inc (NYSE:PSB), Helen of Troy Limited (NASDAQ:HELE), MorphoSys AG (NASDAQ:MOR), and Janus Henderson Group plc (NYSE:JHG). This group of stocks’ market caps match BCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSB | 15 | 54684 | -4 |
| HELE | 17 | 208287 | 2 |
| MOR | 6 | 18693 | 2 |
| JHG | 18 | 198961 | 2 |
| Average | 14 | 120156 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $454 million in BCO’s case. Janus Henderson Group plc (NYSE:JHG) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks The Brink’s Company (NYSE:BCO) is more popular among hedge funds. 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 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately BCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BCO were disappointed as the stock returned -44.7% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
