How do we determine whether Badger Meter, Inc. (NYSE:BMI) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Badger Meter, Inc. (NYSE:BMI) undervalued? The best stock pickers are becoming more confident. The number of long hedge fund bets rose by 5 lately. Our calculations also showed that BMI 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.
Today there are a lot of metrics market participants employ to value their holdings. A pair of the most innovative metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the broader indices by a healthy amount (see the details here).
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/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. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the key hedge fund action surrounding Badger Meter, Inc. (NYSE:BMI).
Hedge fund activity in Badger Meter, Inc. (NYSE:BMI)
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in BMI over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Impax Asset Management held the most valuable stake in Badger Meter, Inc. (NYSE:BMI), which was worth $73.5 million at the end of the third quarter. On the second spot was Marshall Wace which amassed $14.9 million worth of shares. Royce & Associates, Millennium Management, and Citadel Investment Group 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 Impax Asset Management allocated the biggest weight to Badger Meter, Inc. (NYSE:BMI), around 0.96% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.19 percent of its 13F equity portfolio to BMI.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the most outsized position in Badger Meter, Inc. (NYSE:BMI). Marshall Wace had $14.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $3.5 million investment in the stock during the quarter. The following funds were also among the new BMI investors: Dmitry Balyasny's Balyasny Asset Management, Brandon Haley's Holocene Advisors, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Badger Meter, Inc. (NYSE:BMI) but similarly valued. We will take a look at Jagged Peak Energy Inc. (NYSE:JAG), Redfin Corporation (NASDAQ:RDFN), Scorpio Tankers Inc. (NYSE:STNG), and Grupo Simec, S.A.B. de C.V. (NYSE:SIM). All of these stocks' market caps are similar to BMI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JAG,14,162814,1 RDFN,15,213466,5 STNG,24,121555,1 SIM,1,2365,0 Average,13.5,125050,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $142 million in BMI's case. Scorpio Tankers Inc. (NYSE:STNG) is the most popular stock in this table. On the other hand Grupo Simec, S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 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. 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. Hedge funds were also right about betting on BMI as the stock returned 15.8% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.