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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of BRF SA (NYSE:BRFS) based on that data.
Is BRFS a good stock to buy now? Hedge funds were selling. The number of bullish hedge fund bets were cut by 6 in recent months. BRF SA (NYSE:BRFS) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 16. Our calculations also showed that BRFS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 16 hedge funds in our database with BRFS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a large number of tools stock traders have at their disposal to evaluate their stock investments. A duo of the most innovative tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the S&P 500 by a very impressive margin (see the details here).
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to take a glance at the latest hedge fund action surrounding BRF SA (NYSE:BRFS).
Do Hedge Funds Think BRFS Is A Good Stock To Buy Now?
At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from the second quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in BRFS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in BRF SA (NYSE:BRFS) was held by Arrowstreet Capital, which reported holding $6.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $4.4 million position. Other investors bullish on the company included Two Sigma Advisors, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to BRF SA (NYSE:BRFS), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to BRFS.
Judging by the fact that BRF SA (NYSE:BRFS) has witnessed bearish sentiment from hedge fund managers, we can see that there lies a certain "tier" of fund managers that slashed their entire stakes last quarter. It's worth mentioning that Kerr Neilson's Platinum Asset Management dumped the biggest position of the 750 funds followed by Insider Monkey, totaling close to $5.5 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dumped its stock, about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as BRF SA (NYSE:BRFS) but similarly valued. These stocks are Kodiak Sciences Inc (NASDAQ:KOD), Camping World Holdings, Inc. (NYSE:CWH), Alkermes Plc (NASDAQ:ALKS), Tripadvisor Inc (NASDAQ:TRIP), Sanderson Farms, Inc. (NASDAQ:SAFM), Acadia Healthcare Company Inc (NASDAQ:ACHC), and Wyndham Destinations, Inc. (NYSE:WYND). This group of stocks' market valuations resemble BRFS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KOD,20,871726,0 CWH,29,283491,6 ALKS,28,586531,2 TRIP,29,716852,1 SAFM,20,105104,-2 ACHC,24,449899,1 WYND,29,474732,-5 Average,25.6,498334,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $498 million. That figure was $17 million in BRFS's case. Camping World Holdings, Inc. (NYSE:CWH) is the most popular stock in this table. On the other hand Kodiak Sciences Inc (NASDAQ:KOD) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks BRF SA (NYSE:BRFS) is even less popular than KOD. Our overall hedge fund sentiment score for BRFS is 17.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on BRFS as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BRFS as the stock returned 37.8% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.