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BWX Technologies Inc (BWXT): Are Hedge Funds Right About This Stock?

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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. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. What do these smart investors think about BWX Technologies Inc (NYSE:BWXT)?

BWX Technologies Inc (NYSE:BWXT) shareholders have witnessed an increase in hedge fund interest in recent months. BWX Technologies Inc (NYSE:BWXT) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that BWXT isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To the average investor there are dozens of formulas shareholders use to appraise their holdings. Some of the most under-the-radar formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best investment managers can trounce the S&P 500 by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

AQR CAPITAL MANAGEMENT
AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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. With all of this in mind we're going to view the recent hedge fund action surrounding BWX Technologies Inc (NYSE:BWXT).

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

At second quarter's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BWXT over the last 24 quarters. With the smart money's capital changing hands, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Amy Minella's Cardinal Capital has the largest position in BWX Technologies Inc (NYSE:BWXT), worth close to $99.3 million, accounting for 2.4% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $18.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish encompass Mark Lee's Mountaineer Partners Management, Cliff Asness's AQR Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Mountaineer Partners Management allocated the biggest weight to BWX Technologies Inc (NYSE:BWXT), around 7.58% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, earmarking 2.38 percent of its 13F equity portfolio to BWXT.

As one would reasonably expect, key money managers were leading the bulls' herd. D E Shaw, managed by D. E. Shaw, initiated the largest position in BWX Technologies Inc (NYSE:BWXT). D E Shaw had $3.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $1.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Greg Eisner's Engineers Gate Manager, Jinghua Yan's TwinBeech Capital, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as BWX Technologies Inc (NYSE:BWXT) but similarly valued. These stocks are NeoGenomics, Inc. (NASDAQ:NEO), Tripadvisor Inc (NASDAQ:TRIP), Saia Inc (NASDAQ:SAIA), Olo Inc. (NYSE:OLO), Chindata Group Holdings Limited (NASDAQ:CD), Spirit Realty Capital Inc (NYSE:SRC), and Vontier Corporation (NYSE:VNT). This group of stocks' market valuations resemble BWXT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEO,13,108232,-2 TRIP,36,1178260,-9 SAIA,22,418195,6 OLO,14,72548,-7 CD,10,115586,1 SRC,19,258783,1 VNT,34,927030,-4 Average,21.1,439805,-2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $440 million. That figure was $161 million in BWXT's case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Chindata Group Holdings Limited (NASDAQ:CD) is the least popular one with only 10 bullish hedge fund positions. BWX Technologies Inc (NYSE:BWXT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BWXT is 45.9. 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. 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 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% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately BWXT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BWXT investors were disappointed as the stock returned 0.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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