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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Barnes Group Inc. (NYSE:B) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Barnes Group Inc. (NYSE:B) going to take off soon? Investors who are in the know were getting more bullish. The number of bullish hedge fund bets moved up by 8 recently. Barnes Group Inc. (NYSE:B) was in 19 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that B isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 11 hedge funds in our database with B holdings at the end of March.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
At Insider Monkey we scour multiple sources to uncover 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 and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's take a look at the key hedge fund action regarding Barnes Group Inc. (NYSE:B).
How are hedge funds trading Barnes Group Inc. (NYSE:B)?
Heading into the third quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 73% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in B a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Barnes Group Inc. (NYSE:B), with a stake worth $11.3 million reported as of the end of September. Trailing Arrowstreet Capital was Fisher Asset Management, which amassed a stake valued at $9.1 million. D E Shaw, GLG Partners, and Millennium Management 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 Quantinno Capital allocated the biggest weight to Barnes Group Inc. (NYSE:B), around 0.47% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to B.
As aggregate interest increased, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Barnes Group Inc. (NYSE:B). Arrowstreet Capital had $11.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $1.9 million investment in the stock during the quarter. The other funds with brand new B positions are Hoon Kim's Quantinno Capital, Donald Sussman's Paloma Partners, and Bruce Kovner's Caxton Associates LP.
Let's also examine hedge fund activity in other stocks similar to Barnes Group Inc. (NYSE:B). We will take a look at Extended Stay America Inc (NASDAQ:STAY), Nu Skin Enterprises, Inc. (NYSE:NUS), PJT Partners Inc (NYSE:PJT), Spectrum Brands Holdings, Inc. (NYSE:SPB), Principia Biopharma Inc. (NASDAQ:PRNB), AssetMark Financial Holdings, Inc. (NYSE:AMK), and Cimpress plc (NASDAQ:CMPR). This group of stocks' market values match B's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STAY,30,353720,12 NUS,25,240249,7 PJT,21,105078,-1 SPB,26,249356,2 PRNB,26,654270,5 AMK,6,29052,2 CMPR,25,269870,6 Average,22.7,271656,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $272 million. That figure was $39 million in B's case. Extended Stay America Inc (NYSE:STAY) is the most popular stock in this table. On the other hand AssetMark Financial Holdings, Inc. (NYSE:AMK) is the least popular one with only 6 bullish hedge fund positions. Barnes Group Inc. (NYSE:B) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for B is 67.1. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately B wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); B investors were disappointed as the stock returned -9.3% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.