Hedge Funds Have Never Been This Bullish On Brunswick Corporation (BC)
Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 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 Brunswick Corporation (NYSE:BC) in this article.
Is Brunswick Corporation (NYSE:BC) an excellent investment today? The best stock pickers were taking a bullish view. The number of long hedge fund bets advanced by 6 in recent months. Brunswick Corporation (NYSE:BC) was in 42 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 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.
Michael Lowenstein of Kensico Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's check out the key hedge fund action regarding Brunswick Corporation (NYSE:BC).
Do Hedge Funds Think BC Is A Good Stock To Buy Now?
At first quarter's end, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BC over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Cantillon Capital Management, managed by William von Mueffling, holds the most valuable position in Brunswick Corporation (NYSE:BC). Cantillon Capital Management has a $376 million position in the stock, comprising 2.7% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $153.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions encompass Michael Lowenstein's Kensico Capital, Chuck Royce's Royce & Associates and Anthony Bozza's Lakewood Capital Management. In terms of the portfolio weights assigned to each position Kensico Capital allocated the biggest weight to Brunswick Corporation (NYSE:BC), around 4.26% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, designating 4.2 percent of its 13F equity portfolio to BC.
Now, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, established the most outsized position in Brunswick Corporation (NYSE:BC). Millennium Management had $15.1 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $12.6 million investment in the stock during the quarter. The other funds with brand new BC positions are Dmitry Balyasny's Balyasny Asset Management, Ian Simm's Impax Asset Management, and Jinghua Yan's TwinBeech Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Brunswick Corporation (NYSE:BC) but similarly valued. We will take a look at TELUS International (Cda) Inc. (NYSE:TIXT), IAA, Inc. (NYSE:IAA), ChargePoint Holdings, Inc. (NYSE:CHPT), FLIR Systems, Inc. (NASDAQ:FLIR), Tempur Sealy International Inc. (NYSE:TPX), Chemed Corporation (NYSE:CHE), and Skillz Inc. (NYSE:SKLZ). This group of stocks' market valuations match BC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TIXT,10,36105,10 IAA,35,1199081,0 CHPT,24,207630,24 FLIR,33,959692,5 TPX,37,1127729,-6 CHE,24,360419,-7 SKLZ,26,672931,-7 Average,27,651941,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $652 million. That figure was $1037 million in BC's case. Tempur Sealy International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand TELUS International (Cda) Inc. (NYSE:TIXT) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Brunswick Corporation (NYSE:BC) is more popular among hedge funds. Our overall hedge fund sentiment score for BC is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately BC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BC were disappointed as the stock returned -1.3% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
