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Should I Buy Broadridge Financial Solutions, Inc. (BR)?

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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 at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article we look at what those investors think of Broadridge Financial Solutions, Inc. (NYSE:BR).

Broadridge Financial Solutions, Inc. (NYSE:BR) was in 27 hedge funds' portfolios at the end of June. The all time high for this statistic is 35. BR shareholders have witnessed an increase in activity from the world's largest hedge funds recently. There were 22 hedge funds in our database with BR positions at the end of the first quarter. Our calculations also showed that BR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's view the new hedge fund action encompassing Broadridge Financial Solutions, Inc. (NYSE:BR).

Do Hedge Funds Think BR Is A Good Stock To Buy Now?

At second quarter's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in BR a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BR A Good Stock To Buy?
Is BR A Good Stock To Buy?

More specifically, Bristol Gate Capital Partners was the largest shareholder of Broadridge Financial Solutions, Inc. (NYSE:BR), with a stake worth $84.4 million reported as of the end of June. Trailing Bristol Gate Capital Partners was Balyasny Asset Management, which amassed a stake valued at $46.9 million. Renaissance Technologies, Arrowstreet Capital, and GLG Partners 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 Bristol Gate Capital Partners allocated the biggest weight to Broadridge Financial Solutions, Inc. (NYSE:BR), around 4.42% of its 13F portfolio. 1623 Capital is also relatively very bullish on the stock, dishing out 2.91 percent of its 13F equity portfolio to BR.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in Broadridge Financial Solutions, Inc. (NYSE:BR). Balyasny Asset Management had $46.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $30.1 million position during the quarter. The other funds with brand new BR positions are Paul Marshall and Ian Wace's Marshall Wace LLP, Paul Tudor Jones's Tudor Investment Corp, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management.

Let's check out hedge fund activity in other stocks similar to Broadridge Financial Solutions, Inc. (NYSE:BR). We will take a look at M&T Bank Corporation (NYSE:MTB), Charles River Laboratories International Inc. (NYSE:CRL), Warner Music Group Corp. (NASDAQ:WMG), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Incyte Corporation (NASDAQ:INCY), Ally Financial Inc (NYSE:ALLY), and SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). This group of stocks' market valuations match BR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTB,46,539380,10 CRL,44,1217955,2 WMG,29,793609,2 SHG,5,31985,-1 INCY,34,3644056,2 ALLY,54,2432402,3 SSNC,49,2568906,-5 Average,37.3,1604042,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $1604 million. That figure was $316 million in BR's case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 5 bullish hedge fund positions. Broadridge Financial Solutions, Inc. (NYSE:BR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BR is 55.6. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on BR as the stock returned 11.8% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.