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Hedge Funds Have Never Been This Bullish On Badger Meter, Inc. (BMI)

Reymerlyn Martin

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Badger Meter, Inc. (NYSE:BMI).

Is Badger Meter, Inc. (NYSE:BMI) going to take off soon? Money managers are becoming hopeful. The number of bullish hedge fund bets improved by 2 recently. Our calculations also showed that BMI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). BMI was in 20 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 18 hedge funds in our database with BMI holdings at the end of the previous quarter.

At the moment there are a lot of signals investors have at their disposal to appraise stocks. A duo of the best signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top hedge fund managers can beat their index-focused peers by a healthy margin (see the details here).

[caption id="attachment_745225" align="aligncenter" width="400"] Noam Gottesman of GLG Partners[/caption]

Noam Gottesman GLG Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Keeping this in mind let's review the key hedge fund action encompassing Badger Meter, Inc. (NYSE:BMI).

Hedge fund activity in Badger Meter, Inc. (NYSE:BMI)

At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BMI over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

The largest stake in Badger Meter, Inc. (NYSE:BMI) was held by Impax Asset Management, which reported holding $96.1 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $18.6 million position. Other investors bullish on the company included Marshall Wace LLP, Royce & Associates, and GAMCO Investors. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to Badger Meter, Inc. (NYSE:BMI), around 1.07% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.16 percent of its 13F equity portfolio to BMI.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Renaissance Technologies, founded by Jim Simons, assembled the most outsized position in Badger Meter, Inc. (NYSE:BMI). Renaissance Technologies had $5.5 million invested in the company at the end of the quarter. Mika Toikka's AlphaCrest Capital Management also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman's GLG Partners and John Overdeck and David Siegel's Two Sigma Advisors.

Let's also examine hedge fund activity in other stocks similar to Badger Meter, Inc. (NYSE:BMI). These stocks are Vicor Corp (NASDAQ:VICR), Adtalem Global Education Inc. (NYSE:ATGE), Fastly, Inc. (NYSE:FSLY), and Hope Bancorp, Inc. (NASDAQ:HOPE). All of these stocks' market caps resemble BMI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VICR,12,38689,0 ATGE,20,277855,-6 FSLY,19,164296,3 HOPE,19,86079,5 Average,17.5,141730,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $178 million in BMI's case. Adtalem Global Education Inc. (NYSE:ATGE) is the most popular stock in this table. On the other hand Vicor Corp (NASDAQ:VICR) is the least popular one with only 12 bullish hedge fund positions. Badger Meter, Inc. (NYSE:BMI) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately BMI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BMI were disappointed as the stock returned -17.5% during the same time period 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 many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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