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Were Hedge Funds Right About Flocking Into Belden Inc. (BDC)?

Reymerlyn Martin

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Belden Inc. (NYSE:BDC).

Belden Inc. (NYSE:BDC) has experienced an increase in enthusiasm from smart money recently. BDC was in 15 hedge funds' portfolios at the end of December. There were 10 hedge funds in our database with BDC positions at the end of the previous quarter. Our calculations also showed that BDC isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

GOTHAM ASSET MANAGEMENT

Let's check out the latest hedge fund action encompassing Belden Inc. (NYSE:BDC).

What have hedge funds been doing with Belden Inc. (NYSE:BDC)?

Heading into the first quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the second quarter of 2018. On the other hand, there were a total of 13 hedge funds with a bullish position in BDC 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.

BDC_apr2019

The largest stake in Belden Inc. (NYSE:BDC) was held by Millennium Management, which reported holding $15.9 million worth of stock at the end of December. It was followed by Gotham Asset Management with a $5.3 million position. Other investors bullish on the company included Winton Capital Management, Marshall Wace LLP, and Arrowstreet Capital.

Consequently, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the biggest position in Belden Inc. (NYSE:BDC). Millennium Management had $15.9 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also made a $5.3 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding's Winton Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Brandon Haley's Holocene Advisors.

Let's go over hedge fund activity in other stocks similar to Belden Inc. (NYSE:BDC). We will take a look at Everbridge, Inc. (NASDAQ:EVBG), Shake Shack Inc (NYSE:SHAK), Guess', Inc. (NYSE:GES), and iRhythm Technologies, Inc. (NASDAQ:IRTC). This group of stocks' market valuations match BDC's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVBG,22,251142,3 SHAK,19,247116,-3 GES,19,106696,2 IRTC,23,285377,0 Average,20.75,222583,0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $41 million in BDC's case. iRhythm Technologies, Inc. (NASDAQ:IRTC) is the most popular stock in this table. On the other hand Shake Shack Inc (NYSE:SHAK) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Belden Inc. (NYSE:BDC) is even less popular than SHAK. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on BDC as the stock returned 37.7% and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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