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 Broadridge Financial Solutions, Inc. (NYSE:BR) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Broadridge Financial Solutions, Inc. (NYSE:BR) was in 24 hedge funds' portfolios at the end of June. The all time high for this statistics is 35. BR shareholders have witnessed a decrease in hedge fund sentiment lately. There were 29 hedge funds in our database with BR holdings at the end of March. Our calculations also showed that BR 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are several tools stock market investors can use to appraise stocks. A pair of the best tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a healthy margin (see the details here).
Ric Dillon of Diamond Hill Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 we're going to view the latest hedge fund action encompassing Broadridge Financial Solutions, Inc. (NYSE:BR).
How are hedge funds trading Broadridge Financial Solutions, Inc. (NYSE:BR)?
At Q2's end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in BR over the last 20 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Bristol Gate Capital Partners was the largest shareholder of Broadridge Financial Solutions, Inc. (NYSE:BR), with a stake worth $53.6 million reported as of the end of September. Trailing Bristol Gate Capital Partners was Sunriver Management, which amassed a stake valued at $30.9 million. Diamond Hill Capital, AQR Capital Management, and Adage Capital 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 Sunriver Management allocated the biggest weight to Broadridge Financial Solutions, Inc. (NYSE:BR), around 4.87% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, designating 4.86 percent of its 13F equity portfolio to BR.
Seeing as Broadridge Financial Solutions, Inc. (NYSE:BR) has experienced falling interest from hedge fund managers, we can see that there is a sect of hedge funds who were dropping their entire stakes heading into Q3. Interestingly, James Parsons's Junto Capital Management dropped the largest investment of all the hedgies watched by Insider Monkey, totaling about $69.4 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund cut about $46.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks similar to Broadridge Financial Solutions, Inc. (NYSE:BR). We will take a look at SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Ryanair Holdings plc (NASDAQ:RYAAY), Domino's Pizza, Inc. (NYSE:DPZ), ViacomCBS Inc. (NASDAQ:VIAC), GSX Techedu Inc. (NYSE:GSX), Zscaler, Inc. (NASDAQ:ZS), and Kansas City Southern (NYSE:KSU). This group of stocks' market values are closest to BR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSNC,65,2274258,8 RYAAY,21,746925,-1 DPZ,47,1746559,2 VIAC,45,1153093,-9 GSX,13,103316,0 ZS,35,641838,8 KSU,47,502734,2 Average,39,1024103,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1024 million. That figure was $194 million in BR's case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand GSX Techedu Inc. (NYSE:GSX) is the least popular one with only 13 bullish hedge fund positions. Broadridge Financial Solutions, Inc. (NYSE:BR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BR is 31.1. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately BR wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BR investors were disappointed as the stock returned 3.8% since Q2 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.