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We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of BrightView Holdings, Inc. (NYSE:BV) based on that data.
BrightView Holdings, Inc. (NYSE:BV) shareholders have witnessed a decrease in enthusiasm from smart money lately. Our calculations also showed that BV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 58 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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Arnaud Ajdler of Engine 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. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the key hedge fund action encompassing BrightView Holdings, Inc. (NYSE:BV).
How have hedgies been trading BrightView Holdings, Inc. (NYSE:BV)?
Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in BV a year ago. 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 BrightView Holdings, Inc. (NYSE:BV) was held by MSDC Management, which reported holding $150.8 million worth of stock at the end of September. It was followed by Broad Bay Capital with a $2.9 million position. Other investors bullish on the company included Arrowstreet Capital, BlueMar Capital Management, and Islet Management. In terms of the portfolio weights assigned to each position MSDC Management allocated the biggest weight to BrightView Holdings, Inc. (NYSE:BV), around 40.77% of its 13F portfolio. Broad Bay Capital is also relatively very bullish on the stock, setting aside 0.8 percent of its 13F equity portfolio to BV.
Due to the fact that BrightView Holdings, Inc. (NYSE:BV) has faced falling interest from hedge fund managers, it's safe to say that there lies a certain "tier" of fund managers that slashed their entire stakes in the first quarter. It's worth mentioning that Israel Englander's Millennium Management cut the biggest stake of all the hedgies tracked by Insider Monkey, comprising about $8.6 million in stock. Minhua Zhang's fund, Weld Capital Management, also said goodbye to its stock, about $0.2 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds in the first quarter.
Let's also examine hedge fund activity in other stocks similar to BrightView Holdings, Inc. (NYSE:BV). These stocks are Rush Enterprises, Inc. (NASDAQ:RUSHA), Mobile Mini Inc (NASDAQ:MINI), SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), and CBIZ, Inc. (NYSE:CBZ). This group of stocks' market values resemble BV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RUSHA,17,43687,-7 MINI,18,58994,-6 SWTX,14,481453,3 CBZ,10,142017,-3 Average,14.75,181538,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $161 million in BV's case. Mobile Mini Inc (NASDAQ:MINI) is the most popular stock in this table. On the other hand CBIZ, Inc. (NYSE:CBZ) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks BrightView Holdings, Inc. (NYSE:BV) is even less popular than CBZ. Hedge funds dodged a bullet by taking a bearish stance towards BV. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately BV wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BV investors were disappointed as the stock returned 7.3% during the second quarter (through June 17th) 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 most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.