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' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH) in this article.
Hedge fund interest in Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare BCRH to other stocks including Akerna Corp. (NASDAQ:KERN), China Automotive Systems, Inc. (NASDAQ:CAAS), and InflaRx N.V. (NASDAQ:IFRX) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a large number of indicators shareholders can use to analyze their holdings. Some of the most under-the-radar indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outpace the market by a healthy margin (see the details here).
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's take a look at the key hedge fund action surrounding Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH).
How are hedge funds trading Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in BCRH over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the biggest position in Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH). Renaissance Technologies has a $2.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Ron Mass of Almitas Capital, with a $1.7 million position; the fund has 1.8% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Almitas Capital allocated the biggest weight to Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH), around 1.77% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0019 percent of its 13F equity portfolio to BCRH.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Ancora Advisors. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Almitas Capital).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH) but similarly valued. We will take a look at Akerna Corp. (NASDAQ:KERN), China Automotive Systems, Inc. (NASDAQ:CAAS), InflaRx N.V. (NASDAQ:IFRX), and Pathfinder Bancorp, Inc. (NASDAQ:PBHC). This group of stocks' market valuations match BCRH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KERN,4,276,1 CAAS,1,714,0 IFRX,5,6029,1 PBHC,1,3459,0 Average,2.75,2620,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $4 million in BCRH's case. InflaRx N.V. (NASDAQ:IFRX) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) is the least popular one with only 1 bullish hedge fund positions. Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BCRH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BCRH were disappointed as the stock returned -0.4% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.