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Where Do Hedge Funds Stand On Brookfield Asset Management Inc. (BAM)?

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Brookfield Asset Management Inc. (NYSE:BAM), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Brookfield Asset Management Inc. (NYSE:BAM) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds' portfolios at the end of the second quarter of 2021. Our calculations also showed that BAM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare BAM to other stocks including Petroleo Brasileiro S.A. - Petrobras (NYSE:PBR), FedEx Corporation (NYSE:FDX), and The Bank of Nova Scotia (NYSE:BNS) to get a better sense of its popularity.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Tom Gayner
Tom Gayner

Tom Gayner of Markel Gayner Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a look at the key hedge fund action encompassing Brookfield Asset Management Inc. (NYSE:BAM).

Do Hedge Funds Think BAM Is A Good Stock To Buy Now?

At the end of June, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in BAM a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BAM A Good Stock To Buy?
Is BAM A Good Stock To Buy?

Among these funds, Akre Capital Management held the most valuable stake in Brookfield Asset Management Inc. (NYSE:BAM), which was worth $664.8 million at the end of the second quarter. On the second spot was Markel Gayner Asset Management which amassed $444.3 million worth of shares. Viking Global, Horizon Asset Management, and Third Avenue 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 Greenlea Lane Capital allocated the biggest weight to Brookfield Asset Management Inc. (NYSE:BAM), around 11.92% of its 13F portfolio. Markel Gayner Asset Management is also relatively very bullish on the stock, setting aside 5.67 percent of its 13F equity portfolio to BAM.

Due to the fact that Brookfield Asset Management Inc. (NYSE:BAM) has witnessed falling interest from hedge fund managers, it's easy to see that there was a specific group of hedgies that elected to cut their positions entirely by the end of the second quarter. At the top of the heap, Greg Poole's Echo Street Capital Management dumped the biggest investment of all the hedgies followed by Insider Monkey, valued at about $19.3 million in stock, and Sander Gerber's Hudson Bay Capital Management was right behind this move, as the fund cut about $6.7 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now take a look at hedge fund activity in other stocks similar to Brookfield Asset Management Inc. (NYSE:BAM). These stocks are Petroleo Brasileiro S.A. - Petrobras (NYSE:PBR), FedEx Corporation (NYSE:FDX), The Bank of Nova Scotia (NYSE:BNS), Mercadolibre Inc (NASDAQ:MELI), NetEase, Inc (NASDAQ:NTES), CME Group Inc (NASDAQ:CME), and Dell Technologies Inc. (NYSE:DELL). This group of stocks' market valuations match BAM's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBR,25,2799044,-2 FDX,61,2170185,-2 BNS,14,223095,-5 MELI,74,4024188,5 NTES,43,3720524,11 CME,62,2649845,2 DELL,62,5601143,8 Average,48.7,3026861,2.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 48.7 hedge funds with bullish positions and the average amount invested in these stocks was $3027 million. That figure was $1658 million in BAM's case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 14 bullish hedge fund positions. Brookfield Asset Management Inc. (NYSE:BAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BAM is 48.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. A small number of hedge funds were also right about betting on BAM as the stock returned 10.5% since the end of the second quarter (through 10/11) and outperformed the market by an even larger margin.

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