Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by 4 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at BrightView Holdings, Inc. (NYSE:BV) from the perspective of those elite funds.
BrightView Holdings, Inc. (NYSE:BV) investors should pay attention to a decrease in hedge fund interest in recent months. BV was in 8 hedge funds' portfolios at the end of the second quarter of 2019. There were 9 hedge funds in our database with BV holdings at the end of the previous quarter. Our calculations also showed that BV isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's check out the new hedge fund action encompassing BrightView Holdings, Inc. (NYSE:BV).
How have hedgies been trading BrightView Holdings, Inc. (NYSE:BV)?
At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the first quarter of 2019. By comparison, 21 hedge funds held shares or bullish call options in BV a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, MSDC Management was the largest shareholder of BrightView Holdings, Inc. (NYSE:BV), with a stake worth $255 million reported as of the end of March. Trailing MSDC Management was Broad Bay Capital, which amassed a stake valued at $25.6 million. Cardinal Capital, BlueMar Capital Management, and Tudor Investment Corp were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that BrightView Holdings, Inc. (NYSE:BV) has experienced declining sentiment from the smart money, it's safe to say that there is a sect of hedgies that slashed their full holdings heading into Q3. Interestingly, Ken Griffin's Citadel Investment Group cut the largest stake of all the hedgies monitored by Insider Monkey, comprising close to $2.7 million in stock. Matthew Halbower's fund, Pentwater Capital Management, also sold off its stock, about $1.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds heading into Q3.
Let's now review hedge fund activity in other stocks similar to BrightView Holdings, Inc. (NYSE:BV). These stocks are Shenandoah Telecommunications Company (NASDAQ:SHEN), Casella Waste Systems Inc. (NASDAQ:CWST), The Cheesecake Factory Incorporated (NASDAQ:CAKE), and Lattice Semiconductor Corporation (NASDAQ:LSCC). This group of stocks' market caps are closest to BV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SHEN,18,107858,4 CWST,12,174012,-2 CAKE,25,192053,0 LSCC,20,240193,-5 Average,18.75,178529,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $179 million. That figure was $305 million in BV's case. The Cheesecake Factory Incorporated (NASDAQ:CAKE) is the most popular stock in this table. On the other hand Casella Waste Systems Inc. (NASDAQ:CWST) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks BrightView Holdings, Inc. (NYSE:BV) is even less popular than CWST. Hedge funds dodged a bullet by taking a bearish stance towards BV. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BV investors were disappointed as the stock returned -8.3% during the third quarter 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.