Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Booz Allen Hamilton Holding Corporation (NYSE:BAH) in this article.
Booz Allen Hamilton Holding Corporation (NYSE:BAH) investors should be aware of an increase in hedge fund interest of late. Our calculations also showed that BAH 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.
In the financial world there are numerous formulas shareholders put to use to appraise publicly traded companies. A duo of the most under-the-radar formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce their index-focused peers by a superb amount (see the details here).
[caption id="attachment_673876" align="aligncenter" width="1613"] John Overdeck of Two Sigma Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to check out the key hedge fund action surrounding Booz Allen Hamilton Holding Corporation (NYSE:BAH).
How are hedge funds trading Booz Allen Hamilton Holding Corporation (NYSE:BAH)?
At Q3's end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in BAH over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Booz Allen Hamilton Holding Corporation (NYSE:BAH), which was worth $93 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $67 million worth of shares. Polar Capital, Two Sigma Advisors, and Renaissance Technologies 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 Game Creek Capital allocated the biggest weight to Booz Allen Hamilton Holding Corporation (NYSE:BAH), around 2.67% of its portfolio. Axel Capital Management is also relatively very bullish on the stock, setting aside 1.76 percent of its 13F equity portfolio to BAH.
As one would reasonably expect, key money managers were breaking ground themselves. Renaissance Technologies created the biggest position in Booz Allen Hamilton Holding Corporation (NYSE:BAH). Renaissance Technologies had $42.6 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $17.6 million position during the quarter. The other funds with brand new BAH positions are Peter Muller's PDT Partners, David E. Shaw's D E Shaw, and Brad Dunkley and Blair Levinsky's Waratah Capital Advisors.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Booz Allen Hamilton Holding Corporation (NYSE:BAH) but similarly valued. We will take a look at Elanco Animal Health Incorporated (NYSE:ELAN), Bio-Rad Laboratories, Inc. (NYSE:BIO), Marathon Oil Corporation (NYSE:MRO), and Comerica Incorporated (NYSE:CMA). This group of stocks' market valuations are similar to BAH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ELAN,24,359109,-3 BIO,39,1091143,3 MRO,35,394969,3 CMA,28,468164,-4 Average,31.5,578346,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $578 million. That figure was $470 million in BAH's case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table. On the other hand Elanco Animal Health Incorporated (NYSE:ELAN) is the least popular one with only 24 bullish hedge fund positions. Booz Allen Hamilton Holding Corporation (NYSE:BAH) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BAH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BAH were disappointed as the stock returned 2.8% during the fourth quarter (through the end of November) 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.
Disclosure: None. This article was originally published at Insider Monkey.