Should You Add Booz Allen Hamilton Holding Corporation (BAH) to Your Portfolio?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Booz Allen Hamilton Holding Corporation (NYSE:BAH) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Booz Allen Hamilton Holding Corporation (NYSE:BAH) saw a decrease in popularity among smart money investors in our database during the third quarter, as the number of funds from our database long the stock declined by four. Nevertheless, 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 Edgewell Personal Care Company (NYSE:EPC), Tegna Inc (NYSE:TGNA), and QEP Resources Inc (NYSE:QEP) to gather more data points.

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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Now, let’s analyze the new action surrounding Booz Allen Hamilton Holding Corporation (NYSE:BAH).

How have hedgies been trading Booz Allen Hamilton Holding Corporation (NYSE:BAH)?

At the end of September, 23 funds tracked by Insider Monkey were long Booz Allen Hamilton Holding Corporation (NYSE:BAH), down by 15% over the quarter. By comparison, 22 hedge funds held shares or bullish call options in BAH heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Brian Ashford-Russell and Tim Woolley’s Polar Capital has the largest position in Booz Allen Hamilton Holding Corporation (NYSE:BAH), worth close to $57.2 million, accounting for 1% of its total 13F portfolio. Coming in second is Columbus Circle Investors, holding a $42.8 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions encompass Cliff Asness’ AQR Capital Management, Jim Simons’ Renaissance Technologies, 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.

Judging by the fact that Booz Allen Hamilton Holding Corporation (NYSE:BAH) has gone through declining sentiment from the smart money, we can see that there exists a select few hedgies who were dropping their entire stakes by the end of the third quarter. Intriguingly, Joel Greenblatt’s Gotham Asset Management dumped the biggest investment of all the investors tracked by Insider Monkey, valued at an estimated $3.8 million in stock, and Robert B. Gillam’s McKinley Capital Management was right behind this move, as the fund said goodbye to about $3.6 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to Booz Allen Hamilton Holding Corporation (NYSE:BAH). We will take a look at Edgewell Personal Care Company (NYSE:EPC), Tegna Inc (NYSE:TGNA), QEP Resources Inc (NYSE:QEP), and Gerdau SA (ADR) (NYSE:GGB). This group of stocks’ market valuations are closest to BAH’s market valuation.

As you can see these stocks had an average of 22 funds with bullish positions and the average amount invested in these stocks was $418 million. That figure was $290 million in BAH’s case. QEP Resources Inc (NYSE:QEP) is the most popular stock in this table. On the other hand Gerdau SA (ADR) (NYSE:GGB) is the least popular one with only 11 bullish hedge fund positions. Booz Allen Hamilton Holding Corporation (NYSE:BAH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QEP Resources Inc (NYSE:QEP) might be a better candidate to consider taking a long position in.

Disclosure: none