At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Belden Inc. (NYSE:BDC) makes for a good investment right now.
Is Belden Inc. (NYSE:BDC) worth your attention right now? Investors who are in the know are in a bullish mood. The number of long hedge fund positions improved by 1 recently. Our calculations also showed that BDC isn't among the 30 most popular stocks among hedge funds. BDC was in 16 hedge funds' portfolios at the end of March. There were 15 hedge funds in our database with BDC holdings at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We're going to take a peek at the recent hedge fund action encompassing Belden Inc. (NYSE:BDC).
What does smart money think about Belden Inc. (NYSE:BDC)?
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BDC over the last 15 quarters. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in Belden Inc. (NYSE:BDC). Arrowstreet Capital has a $18.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $11.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Joel Greenblatt's Gotham Asset Management, D. E. Shaw's D E Shaw and Ken Griffin's Citadel Investment Group.
As industrywide interest jumped, specific money managers were leading the bulls' herd. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in Belden Inc. (NYSE:BDC). D E Shaw had $9.7 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $1 million position during the quarter. The following funds were also among the new BDC investors: Cliff Asness's AQR Capital Management and Jeffrey Talpins's Element Capital Management.
Let's now review hedge fund activity in other stocks similar to Belden Inc. (NYSE:BDC). These stocks are BioTelemetry, Inc. (NASDAQ:BEAT), Allegiant Travel Company (NASDAQ:ALGT), Medpace Holdings, Inc. (NASDAQ:MEDP), and KB Home (NYSE:KBH). This group of stocks' market values are similar to BDC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BEAT,21,36868,-3 ALGT,20,459191,-1 MEDP,24,128566,1 KBH,21,406078,7 Average,21.5,257676,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $69 million in BDC's case. Medpace Holdings, Inc. (NASDAQ:MEDP) is the most popular stock in this table. On the other hand Allegiant Travel Company (NASDAQ:ALGT) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Belden Inc. (NYSE:BDC) is even less popular than ALGT. Hedge funds clearly dropped the ball on BDC as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on BDC as the stock returned 11.1% during the same period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.