The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards B&G Foods, Inc. (NYSE:BGS).
B&G Foods, Inc. (NYSE:BGS) was in 10 hedge funds' portfolios at the end of the fourth quarter of 2018. BGS shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. There were 13 hedge funds in our database with BGS positions at the end of the previous quarter. Our calculations also showed that bgs isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We're going to review the new hedge fund action surrounding B&G Foods, Inc. (NYSE:BGS).
How are hedge funds trading B&G Foods, Inc. (NYSE:BGS)?
At Q4's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in BGS a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Diamond Hill Capital was the largest shareholder of B&G Foods, Inc. (NYSE:BGS), with a stake worth $65.7 million reported as of the end of September. Trailing Diamond Hill Capital was Cardinal Capital, which amassed a stake valued at $54 million. Citadel Investment Group, Balyasny Asset Management, and Fisher Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that B&G Foods, Inc. (NYSE:BGS) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there were a few money managers that elected to cut their entire stakes heading into Q3. Intriguingly, Ken Griffin's Citadel Investment Group sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, comprising about $5.3 million in call options, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund sold off about $0.7 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds heading into Q3.
Let's go over hedge fund activity in other stocks similar to B&G Foods, Inc. (NYSE:BGS). We will take a look at Banner Corporation (NASDAQ:BANR), Urban Edge Properties (NYSE:UE), Tanger Factory Outlet Centers Inc. (NYSE:SKT), and American Assets Trust, Inc (NYSE:AAT). This group of stocks' market valuations match BGS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BANR,18,85482,-2 UE,12,75333,0 SKT,14,77195,3 AAT,14,102948,3 Average,14.5,85240,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $127 million in BGS's case. Banner Corporation (NASDAQ:BANR) is the most popular stock in this table. On the other hand Urban Edge Properties (NYSE:UE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks B&G Foods, Inc. (NYSE:BGS) is even less popular than UE. Hedge funds dodged a bullet by taking a bearish stance towards BGS. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately BGS wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); BGS investors were disappointed as the stock returned -12.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.