The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Blucora Inc (NASDAQ:BCOR) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Blucora Inc (NASDAQ:BCOR) a buy, sell, or hold? Investors who are in the know were becoming hopeful. The number of long hedge fund bets improved by 1 recently. Blucora Inc (NASDAQ:BCOR) was in 20 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 23. Our calculations also showed that BCOR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 19 hedge funds in our database with BCOR positions at the end of the first quarter. Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox.Keeping this in mind let's take a gander at the new hedge fund action regarding Blucora Inc (NASDAQ:BCOR).
Hedge fund activity in Blucora Inc (NASDAQ:BCOR)
At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the first quarter of 2020. On the other hand, there were a total of 16 hedge funds with a bullish position in BCOR a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Blucora Inc (NASDAQ:BCOR) was held by Renaissance Technologies, which reported holding $28.4 million worth of stock at the end of September. It was followed by Armistice Capital with a $23.4 million position. Other investors bullish on the company included D E Shaw, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Blucora Inc (NASDAQ:BCOR), around 1.03% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, setting aside 0.78 percent of its 13F equity portfolio to BCOR.
As aggregate interest increased, key money managers were breaking ground themselves. Armistice Capital, managed by Steven Boyd, established the largest position in Blucora Inc (NASDAQ:BCOR). Armistice Capital had $23.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, Donald Sussman's Paloma Partners, and Chuck Royce's Royce & Associates.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Blucora Inc (NASDAQ:BCOR) but similarly valued. We will take a look at PAR Technology Corporation (NYSE:PAR), Franklin Street Properties Corp. (NYSE:FSP), The Children's Place Inc. (NASDAQ:PLCE), Globalstar, Inc. (PINK:GSAT), Scholar Rock Holding Corporation (NASDAQ:SRRK), QuinStreet Inc (NASDAQ:QNST), and Banc of California, Inc. (NASDAQ:BANC). This group of stocks' market values are similar to BCOR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAR,10,214177,2 FSP,13,28430,8 PLCE,23,138666,5 GSAT,9,56377,-3 SRRK,5,58243,0 QNST,20,110137,-2 BANC,13,41683,3 Average,13.3,92530,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $75 million in BCOR's case. The Children's Place Inc. (NASDAQ:PLCE) is the most popular stock in this table. On the other hand Scholar Rock Holding Corporation (NASDAQ:SRRK) is the least popular one with only 5 bullish hedge fund positions. Blucora Inc (NASDAQ:BCOR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BCOR is 32.1. 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 positive signal but 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately BCOR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on BCOR were disappointed as the stock returned -17.5% in Q3 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.