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Hedge Funds Have Never Been More Bullish On B&G Foods, Inc. (BGS)

Nina Todic

"The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak," are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards B&G Foods, Inc. (NYSE:BGS) and see how it was affected.

Is B&G Foods, Inc. (NYSE:BGS) going to take off soon? Money managers are in an optimistic mood. The number of bullish hedge fund positions advanced by 9 recently. Our calculations also showed that bgs 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.

[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman, GLG Partners[/caption]

Noam Gottesman GLG Partners

Let's review the recent hedge fund action regarding B&G Foods, Inc. (NYSE:BGS).

How have hedgies been trading B&G Foods, Inc. (NYSE:BGS)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 90% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BGS over the last 15 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.

No of Hedge Funds with BGS Positions

When looking at the institutional investors followed by Insider Monkey, Cardinal Capital, managed by Amy Minella, holds the largest position in B&G Foods, Inc. (NYSE:BGS). Cardinal Capital has a $58.7 million position in the stock, comprising 2% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $49 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Ric Dillon's Diamond Hill Capital, Noam Gottesman's GLG Partners and Ken Griffin's Citadel Investment Group.

As industrywide interest jumped, key hedge funds have jumped into B&G Foods, Inc. (NYSE:BGS) headfirst. GLG Partners, managed by Noam Gottesman, created the biggest position in B&G Foods, Inc. (NYSE:BGS). GLG Partners had $16.9 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $16.8 million investment in the stock during the quarter. The other funds with brand new BGS positions are D. E. Shaw's D E Shaw, Israel Englander's Millennium Management, and Matthew Hulsizer's PEAK6 Capital Management.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as B&G Foods, Inc. (NYSE:BGS) but similarly valued. These stocks are PROS Holdings, Inc. (NYSE:PRO), TIER REIT, Inc. (NYSE:TIER), Knowles Corp (NYSE:KN), and Marcus & Millichap Inc (NYSE:MMI). This group of stocks' market values match BGS's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRO,19,159084,4 TIER,12,127254,5 KN,17,223503,-7 MMI,12,132716,-1 Average,15,160639,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $196 million in BGS's case. PROS Holdings, Inc. (NYSE:PRO) is the most popular stock in this table. On the other hand TIER REIT, Inc. (NYSE:TIER) is the least popular one with only 12 bullish hedge fund positions. B&G Foods, Inc. (NYSE:BGS) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately BGS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BGS were disappointed as the stock returned -7.4% during the same period 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 13 of these stocks already outperformed the market so far in Q2.

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

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