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. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) a good stock to buy now? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets moved up by 2 lately. Our calculations also showed that BRPA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). BRPA was in 7 hedge funds' portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with BRPA 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.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_731850" align="aligncenter" width="473"] Paul Glazer of Glazer Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action regarding Big Rock Partners Acquisition Corp. (NASDAQ:BRPA).
Hedge fund activity in Big Rock Partners Acquisition Corp. (NASDAQ:BRPA)
At Q3's end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BRPA over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) was held by Magnetar Capital, which reported holding $4.9 million worth of stock at the end of September. It was followed by Weiss Asset Management with a $2.6 million position. Other investors bullish on the company included Vertex One Asset Management, Hudson Bay Capital Management, and Glazer Capital. In terms of the portfolio weights assigned to each position Vertex One Asset Management allocated the biggest weight to Big Rock Partners Acquisition Corp. (NASDAQ:BRPA), around 0.27% of its 13F portfolio. Weiss Asset Management is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to BRPA.
Now, key money managers have jumped into Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) headfirst. Magnetar Capital, managed by Alec Litowitz and Ross Laser, initiated the biggest position in Big Rock Partners Acquisition Corp. (NASDAQ:BRPA). Magnetar Capital had $4.9 million invested in the company at the end of the quarter. John Thiessen's Vertex One Asset Management also made a $1.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is John Thiessen's Vertex One Asset Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) but similarly valued. These stocks are Otonomy Inc (NASDAQ:OTIC), Tuesday Morning Corporation (NASDAQ:TUES), Superior Industries International Inc. (NYSE:SUP), and Orgenesis Inc. (NASDAQ:ORGS). This group of stocks' market valuations are closest to BRPA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OTIC,8,12372,-1 TUES,12,5356,3 SUP,16,13920,1 ORGS,1,685,0 Average,9.25,8083,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $9 million in BRPA's case. Superior Industries International Inc. (NYSE:SUP) is the most popular stock in this table. On the other hand Orgenesis Inc. (NASDAQ:ORGS) is the least popular one with only 1 bullish hedge fund positions. Big Rock Partners Acquisition Corp. (NASDAQ:BRPA) 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 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 BRPA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BRPA investors were disappointed as the stock returned -0.8% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.