As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the third quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Brunswick Corporation (NYSE:BC).
Is Brunswick Corporation (NYSE:BC) ready to rally soon? The smart money is reducing their bets on the stock. The number of long hedge fund bets were trimmed by 2 in recent months. Our calculations also showed that BC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BC was in 28 hedge funds' portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with BC positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are many methods market participants use to grade stocks. Some of the less utilized methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the broader indices by a superb amount (see the details here).
[caption id="attachment_364853" align="aligncenter" width="992"] William Von Mueffling of Cantillon Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the recent hedge fund action surrounding Brunswick Corporation (NYSE:BC).
What have hedge funds been doing with Brunswick Corporation (NYSE:BC)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2019. On the other hand, there were a total of 34 hedge funds with a bullish position in BC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Cantillon Capital Management held the most valuable stake in Brunswick Corporation (NYSE:BC), which was worth $182 million at the end of the third quarter. On the second spot was Lakewood Capital Management which amassed $174.8 million worth of shares. Adage Capital Management, D E Shaw, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lakewood Capital Management allocated the biggest weight to Brunswick Corporation (NYSE:BC), around 5.96% of its portfolio. Valueworks LLC is also relatively very bullish on the stock, earmarking 3.92 percent of its 13F equity portfolio to BC.
Seeing as Brunswick Corporation (NYSE:BC) has experienced bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there were a few hedge funds that elected to cut their full holdings heading into Q4. At the top of the heap, John Murphy's Levin Easterly Partners said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, comprising about $14.8 million in stock, and Jeffrey Altman's Owl Creek Asset Management was right behind this move, as the fund dumped about $11.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Brunswick Corporation (NYSE:BC). We will take a look at WPX Energy Inc (NYSE:WPX), Landstar System, Inc. (NASDAQ:LSTR), The Macerich Company (NYSE:MAC), and Selective Insurance Group (NASDAQ:SIGI). This group of stocks' market values match BC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WPX,44,582500,4 LSTR,19,191180,-3 MAC,22,136466,1 SIGI,24,120207,10 Average,27.25,257588,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $564 million in BC's case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand Landstar System, Inc. (NASDAQ:LSTR) is the least popular one with only 19 bullish hedge fund positions. Brunswick Corporation (NYSE:BC) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on BC as the stock returned 13.2% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.