U.S. Markets open in 3 hrs 24 mins

Hedge Funds Have Never Been This Bullish On Brookfield Asset Management Inc. (BAM)

Abigail Fisher

Insider Monkey finished processing more than 738 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2019. What do these smart investors think about Brookfield Asset Management Inc. (NYSE:BAM)?

Brookfield Asset Management Inc. (NYSE:BAM) has seen an increase in support from the world's most elite money managers of late. Our calculations also showed that BAM isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Tom Gayner

Let's take a gander at the fresh hedge fund action regarding Brookfield Asset Management Inc. (NYSE:BAM).

How are hedge funds trading Brookfield Asset Management Inc. (NYSE:BAM)?

Heading into the second quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BAM over the last 15 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

BAM_june2019

Among these funds, Markel Gayner Asset Management held the most valuable stake in Brookfield Asset Management Inc. (NYSE:BAM), which was worth $267.7 million at the end of the first quarter. On the second spot was SQ Advisors which amassed $178.6 million worth of shares. Moreover, Third Avenue Management, Horizon Asset Management, and Osterweis Capital Management were also bullish on Brookfield Asset Management Inc. (NYSE:BAM), allocating a large percentage of their portfolios to this stock.

Consequently, specific money managers have jumped into Brookfield Asset Management Inc. (NYSE:BAM) headfirst. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, created the most outsized position in Brookfield Asset Management Inc. (NYSE:BAM). Waratah Capital Advisors had $2.9 million invested in the company at the end of the quarter. Jeffrey Talpins's Element Capital Management also made a $0.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves's BlueCrest Capital Mgmt. and Mike Vranos's Ellington.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Brookfield Asset Management Inc. (NYSE:BAM) but similarly valued. These stocks are ServiceNow Inc (NYSE:NOW), Waste Management, Inc. (NYSE:WM), Ecopetrol S.A. (NYSE:EC), and JD.Com Inc (NASDAQ:JD). This group of stocks' market valuations resemble BAM's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NOW,65,3793991,4 WM,33,3092288,-3 EC,15,232967,-1 JD,48,4342319,14 Average,40.25,2865391,3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $2865 million. That figure was $825 million in BAM's case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 15 bullish hedge fund positions. Brookfield Asset Management Inc. (NYSE:BAM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on BAM, though not to the same extent, as the stock returned -0.4% during the same time frame and outperformed the market as well.

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

Related Content