The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Ballard Power Systems Inc. (NASDAQ:BLDP) and determine whether the smart money was really smart about this stock.
Is Ballard Power Systems Inc. (NASDAQ:BLDP) a buy, sell, or hold? Money managers were getting more bullish. The number of bullish hedge fund positions rose by 4 recently. Our calculations also showed that BLDP 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). BLDP was in 10 hedge funds' portfolios at the end of March. There were 6 hedge funds in our database with BLDP holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 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.
[caption id="attachment_365194" align="aligncenter" width="400"] David E. Shaw of D.E. Shaw[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's analyze the key hedge fund action surrounding Ballard Power Systems Inc. (NASDAQ:BLDP).
How are hedge funds trading Ballard Power Systems Inc. (NASDAQ:BLDP)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in BLDP a year ago. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the number one position in Ballard Power Systems Inc. (NASDAQ:BLDP). Two Sigma Advisors has a $7.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Two Sigma Advisors's heels is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $7.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish encompass Renaissance Technologies, D. E. Shaw's D E Shaw and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Ballard Power Systems Inc. (NASDAQ:BLDP), around 0.54% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to BLDP.
Now, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in Ballard Power Systems Inc. (NASDAQ:BLDP). Marshall Wace LLP had $7.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $2.2 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Mark Broach's Manatuck Hill Partners, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's now review hedge fund activity in other stocks similar to Ballard Power Systems Inc. (NASDAQ:BLDP). We will take a look at KB Home (NYSE:KBH), Applied Industrial Technologies Inc (NYSE:AIT), National Storage Affiliates Trust (NYSE:NSA), and Fitbit Inc (NYSE:FIT). All of these stocks' market caps match BLDP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KBH,25,291267,-4 AIT,14,35993,-8 NSA,18,77143,7 FIT,26,273167,2 Average,20.75,169393,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $169 million. That figure was $21 million in BLDP's case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand Applied Industrial Technologies Inc (NYSE:AIT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Ballard Power Systems Inc. (NASDAQ:BLDP) is even less popular than AIT. Hedge funds clearly dropped the ball on BLDP as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on BLDP as the stock returned 102.4% in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.