Should You Buy Bel Fuse, Inc. (BELFB)?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Bel Fuse, Inc. (NASDAQ:BELFB)?
Bel Fuse, Inc. (NASDAQ:BELFB) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds' portfolios at the end of March. At the end of this article we will also compare BELFB to other stocks including Avianca Holdings SA (NYSE:AVH), Bankwell Financial Group, Inc. (NASDAQ:BWFG), and Aytu BioScience, Inc. (NASDAQ:AYTU) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are numerous indicators stock traders can use to value publicly traded companies. A couple of the most innovative indicators are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best money managers can outpace the broader indices by a superb margin (see the details here).
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Howard Marks of Oaktree Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's analyze the key hedge fund action surrounding Bel Fuse, Inc. (NASDAQ:BELFB).
Hedge fund activity in Bel Fuse, Inc. (NASDAQ:BELFB)
At Q1's end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BELFB over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Bel Fuse, Inc. (NASDAQ:BELFB) was held by Renaissance Technologies, which reported holding $5.3 million worth of stock at the end of September. It was followed by Oaktree Capital Management with a $4.5 million position. Other investors bullish on the company included Millennium Management, Horizon Asset Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Oaktree Capital Management allocated the biggest weight to Bel Fuse, Inc. (NASDAQ:BELFB), around 0.13% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to BELFB.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Polaris Capital Management. 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 Arrowstreet Capital).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Bel Fuse, Inc. (NASDAQ:BELFB) but similarly valued. These stocks are Avianca Holdings SA (NYSE:AVH), Bankwell Financial Group, Inc. (NASDAQ:BWFG), Aytu BioScience, Inc. (NASDAQ:AYTU), and DHI Group Inc. (NYSE:DHX). This group of stocks' market valuations resemble BELFB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVH,4,1570,1 BWFG,4,15637,-1 AYTU,5,827,4 DHX,15,30451,-1 Average,7,12121,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $11 million in BELFB's case. DHI Group Inc. (NYSE:DHX) is the most popular stock in this table. On the other hand Avianca Holdings SA (NYSE:AVH) is the least popular one with only 4 bullish hedge fund positions. Bel Fuse, Inc. (NASDAQ:BELFB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately BELFB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BELFB investors were disappointed as the stock returned 18% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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