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Do Hedge Funds Love The Brink’s Company (BCO)?

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about The Brink's Company (NYSE:BCO).

Is The Brink's Company (NYSE:BCO) going to take off soon? Investors who are in the know were in a bearish mood. The number of bullish hedge fund positions retreated by 2 recently. The Brink's Company (NYSE:BCO) was in 24 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that BCO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are a multitude of indicators stock market investors can use to analyze stocks. Some of the less known indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Chuck Royce
Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. Now let's review the fresh hedge fund action surrounding The Brink's Company (NYSE:BCO).

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

At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in BCO a year ago. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

The largest stake in The Brink's Company (NYSE:BCO) was held by P2 Capital Partners, which reported holding $155.9 million worth of stock at the end of December. It was followed by Ariel Investments with a $134.6 million position. Other investors bullish on the company included Brahman Capital, Portolan Capital Management, and Clearline Capital. In terms of the portfolio weights assigned to each position P2 Capital Partners allocated the biggest weight to The Brink's Company (NYSE:BCO), around 10.34% of its 13F portfolio. AREX Capital Management is also relatively very bullish on the stock, setting aside 4.66 percent of its 13F equity portfolio to BCO.

Seeing as The Brink's Company (NYSE:BCO) has experienced falling interest from hedge fund managers, it's easy to see that there lies a certain "tier" of hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Anthony Joseph Vaccarino's North Fourth Asset Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, totaling close to $6.3 million in stock. Brandon Haley's fund, Holocene Advisors, also cut its stock, about $2.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.

Let's also examine hedge fund activity in other stocks similar to The Brink's Company (NYSE:BCO). We will take a look at Southwest Gas Holdings, Inc. (NYSE:SWX), Colliers International Group Inc (NASDAQ:CIGI), AllianceBernstein Holding LP (NYSE:AB), Rapid7 Inc (NASDAQ:RPD), Switch, Inc. (NYSE:SWCH), Carter's, Inc. (NYSE:CRI), and Hayward Holdings, Inc. (NYSE:HAYW). This group of stocks' market values are similar to BCO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWX,23,159735,6 CIGI,14,866464,3 AB,8,40384,-1 RPD,25,151718,4 SWCH,10,187483,-8 CRI,27,265128,2 HAYW,25,209769,25 Average,18.9,268669,4.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $407 million in BCO's case. Carter's, Inc. (NYSE:CRI) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 8 bullish hedge fund positions. The Brink's Company (NYSE:BCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BCO is 70.8. 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 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately BCO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BCO were disappointed as the stock returned -3.8% since the end of March (through 7/16) 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 many of these stocks already outperformed the market since 2019.

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