The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Babcock & Wilcox Enterprises Inc (NYSE:BW).
Babcock & Wilcox Enterprises Inc (NYSE:BW) was in 8 hedge funds' portfolios at the end of September. BW shareholders have witnessed a decrease in hedge fund sentiment lately. There were 12 hedge funds in our database with BW holdings at the end of the previous quarter. Our calculations also showed that BW 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In the eyes of most traders, hedge funds are viewed as slow, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at the moment, We choose to focus on the leaders of this club, approximately 750 funds. These investment experts preside over bulk of the smart money's total asset base, and by tailing their finest picks, Insider Monkey has discovered various investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_530601" align="alignnone" width="600"] Warren Lichtenstein of Steel Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a glance at the latest hedge fund action regarding Babcock & Wilcox Enterprises Inc (NYSE:BW).
What have hedge funds been doing with Babcock & Wilcox Enterprises Inc (NYSE:BW)?
Heading into the fourth quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BW over the last 17 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Steel Partners held the most valuable stake in Babcock & Wilcox Enterprises Inc (NYSE:BW), which was worth $12 million at the end of the third quarter. On the second spot was VIEX Capital Advisors which amassed $10 million worth of shares. SCW Capital Management, Wynnefield Capital, 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 SCW Capital Management allocated the biggest weight to Babcock & Wilcox Enterprises Inc (NYSE:BW), around 6.79% of its 13F portfolio. VIEX Capital Advisors is also relatively very bullish on the stock, dishing out 5.94 percent of its 13F equity portfolio to BW.
Judging by the fact that Babcock & Wilcox Enterprises Inc (NYSE:BW) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there were a few hedge funds who were dropping their entire stakes last quarter. Interestingly, Phil Frohlich's Prescott Group Capital Management dumped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, comprising close to $1 million in stock. John A. Levin's fund, Levin Capital Strategies, also said goodbye to its stock, about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Babcock & Wilcox Enterprises Inc (NYSE:BW) but similarly valued. We will take a look at Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), Brasilagro Cia Brasileira De Propriedades Agricolas (NYSE:LND), Hamilton Beach Brands Holding Company (NYSE:HBB), and Farmer Brothers Co. (NASDAQ:FARM). All of these stocks' market caps resemble BW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGLE,13,89709,-3 LND,1,47,0 HBB,5,1794,4 FARM,13,73223,3 Average,8,41193,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $35 million in BW's case. Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is the most popular stock in this table. On the other hand Brasilagro Cia Brasileira De Propriedades Agricolas (NYSE:LND) is the least popular one with only 1 bullish hedge fund positions. Babcock & Wilcox Enterprises Inc (NYSE:BW) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 BW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BW investors were disappointed as the stock returned -27.8% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.