A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Broadridge Financial Solutions, Inc. (NYSE:BR).
Is Broadridge Financial Solutions, Inc. (NYSE:BR) going to take off soon? Money managers are getting less bullish. The number of long hedge fund bets dropped by 5 in recent months. Our calculations also showed that BR isn't among the 30 most popular stocks among hedge funds. BR was in 21 hedge funds' portfolios at the end of June. There were 26 hedge funds in our database with BR holdings at the end of the previous quarter.
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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to review the recent hedge fund action regarding Broadridge Financial Solutions, Inc. (NYSE:BR).
What have hedge funds been doing with Broadridge Financial Solutions, Inc. (NYSE:BR)?
At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in BR a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Broadridge Financial Solutions, Inc. (NYSE:BR), with a stake worth $96.2 million reported as of the end of March. Trailing AQR Capital Management was Adage Capital Management, which amassed a stake valued at $34.8 million. Diamond Hill Capital, GLG Partners, and Osterweis Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Broadridge Financial Solutions, Inc. (NYSE:BR) has experienced falling interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of money managers that slashed their positions entirely last quarter. Interestingly, Dmitry Balyasny's Balyasny Asset Management dumped the largest stake of the 750 funds watched by Insider Monkey, worth close to $35.1 million in stock. Israel Englander's fund, Millennium Management, also sold off its stock, about $30.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 5 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Broadridge Financial Solutions, Inc. (NYSE:BR) but similarly valued. These stocks are Garmin Ltd. (NASDAQ:GRMN), Arch Capital Group Ltd. (NASDAQ:ACGL), EXACT Sciences Corporation (NASDAQ:EXAS), and Waters Corporation (NYSE:WAT). This group of stocks' market valuations match BR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GRMN,32,456384,5 ACGL,23,1291283,11 EXAS,32,837125,-1 WAT,26,603252,-4 Average,28.25,797011,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $797 million. That figure was $254 million in BR's case. Garmin Ltd. (NASDAQ:GRMN) is the most popular stock in this table. On the other hand Arch Capital Group Ltd. (NASDAQ:ACGL) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Broadridge Financial Solutions, Inc. (NYSE:BR) is even less popular than ACGL. Hedge funds dodged a bullet by taking a bearish stance towards BR. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BR investors were disappointed as the stock returned -2.1% during 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 20 most popular stocks (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.