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Why Broadridge Financial Solutions (BR) Stock is a Compelling Investment Case

Alex Smith
·3 min read

Ensemble Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 11.60% for the third quarter, outperforming its benchmark, the S&P 500 Index which returned 8.93% in the same quarter. You should check out Ensemble Fund's top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Ensemble Capital highlighted a few stocks and Broadridge Financial Solutions Inc. (NYSE:BR) is one of them. Broadridge Financial Solutions Inc. (NYSE:BR) is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. Year-to-date, Broadridge Financial Solutions Inc. (NYSE:BR) stock gained 15.1% and on October 9th it had a closing price of $140.84. Here is what Ensemble Capital said:

"Broadridge Financial Solutions: Broadridge was one of the few companies in our portfolio that back in early March we assessed as being more or less unaffected by the pandemic. No matter how bad the virus was, it would continue to be a requirement that all brokerage firms send their customers monthly statements and trade confirms, that bond trades continue to be processed, and that corporate proxy votes occur as scheduled. Broadridge is the “plumbing” on which many key parts of the financial market system depend. And indeed, the revenue and earnings generated in the fiscal year ending on June 30th of this year was nearly the same as what was expected prior to the pandemic as are consensus expectations for the year ahead. The modest performance of the stock this past quarter appears to us to be nothing more than a bit of a pause for this relatively boring, but mission critical business."

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accounting, business, accountant, chart, project, executive, plan, analyst, group, briefing, laptop, closeup, statistics, table, economics, hands, corporate, concept, success,

Nonwarit/Shutterstock.com

In Q2 2020, the number of bullish hedge fund positions on Broadridge Financial Solutions Inc. (NYSE:BR) stock decreased by about 17% from the previous quarter (see the chart here), so a number of other hedge fund managers don't seem to agree with Broadridge's growth potential. Our calculations showed that Broadridge Financial Solutions Inc. (NYSE:BR) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers after its stock price crashed. 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 enewsletter below to receive our stories in your inbox:

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