Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of BWX Technologies Inc (NYSE:BWXT) based on that data.
Is BWX Technologies Inc (NYSE:BWXT) going to take off soon? Investors who are in the know are in a bullish mood. The number of bullish hedge fund bets went up by 2 lately. Our calculations also showed that BWXT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let's take a gander at the new hedge fund action encompassing BWX Technologies Inc (NYSE:BWXT).
What have hedge funds been doing with BWX Technologies Inc (NYSE:BWXT)?
Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BWXT over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Two Sigma Advisors held the most valuable stake in BWX Technologies Inc (NYSE:BWXT), which was worth $17.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $11.8 million worth of shares. GLG Partners, Ancora Advisors, and Marshall Wace 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 GRT Capital Partners allocated the biggest weight to BWX Technologies Inc (NYSE:BWXT), around 0.9% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.29 percent of its 13F equity portfolio to BWXT.
As industrywide interest jumped, specific money managers have been driving this bullishness. PDT Partners, managed by Peter Muller, initiated the largest position in BWX Technologies Inc (NYSE:BWXT). PDT Partners had $2.3 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $1.2 million position during the quarter. The following funds were also among the new BWXT investors: Steve Cohen's Point72 Asset Management, Hoon Kim's Quantinno Capital, and Minhua Zhang's Weld Capital Management.
Let's now review hedge fund activity in other stocks similar to BWX Technologies Inc (NYSE:BWXT). We will take a look at Ingredion Incorporated (NYSE:INGR), Cloudflare, Inc. (NYSE:NET), Suzano S.A. (NYSE:SUZ), and Amarin Corporation plc (NASDAQ:AMRN). All of these stocks' market caps resemble BWXT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INGR,27,343195,6 NET,33,144754,33 SUZ,4,36039,2 AMRN,29,1392510,-4 Average,23.25,479125,9.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $479 million. That figure was $59 million in BWXT's case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 4 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. 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 BWXT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BWXT investors were disappointed as the stock returned 5.4% 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.