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Hedge Funds Are Crazy About Brown-Forman Corporation (BF.B)

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Brown-Forman Corporation (NYSE:BF.B) was in 17 hedge funds’ portfolio at the end of December. BF.B investors should be aware of an increase in hedge fund interest recently. There were 16 hedge funds in our database with BF.B holdings at the end of the previous quarter.

To most market participants, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, we look at the top tier of this club, close to 450 funds. It is widely believed that this group oversees the lion’s share of all hedge funds’ total capital, and by paying attention to their top stock picks, we have come up with a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Just as important, positive insider trading sentiment is another way to parse down the world of equities. As the old adage goes: there are plenty of stimuli for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this tactic if you understand what to do (learn more here).

With all of this in mind, let’s take a look at the latest action encompassing Brown-Forman Corporation (NYSE:BF.B).

How have hedgies been trading Brown-Forman Corporation (NYSE:BF.B)?

At the end of the fourth quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 6% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably.

Brown-Forman (BF)According to our comprehensive database, Gardner Russo & Gardner, managed by Tom Russo, holds the biggest position in Brown-Forman Corporation (NYSE:BF.B). Gardner Russo & Gardner has a $171 million position in the stock, comprising 2.4% of its 13F portfolio. Sitting at the No. 2 spot is Mario Gabelli of GAMCO Investors, with a $58.5 million position; 0.4% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Richard Chilton’s Chilton Investment Company, Tom Gayner’s Markel Gayner Asset Management and David Harding’s Winton Capital Management.

Now, key money managers have jumped into Brown-Forman Corporation (NYSE:BF.B) headfirst. Ellington, managed by Mike Vranos, initiated the most outsized position in Brown-Forman Corporation (NYSE:BF.B). Ellington had 0.7 million invested in the company at the end of the quarter. Andy Redleaf’s Whitebox Advisors also initiated a $0.2 million position during the quarter. The only other fund with a brand new BF.B position is Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Insider trading activity in Brown-Forman Corporation (NYSE:BF.B)

Insider buying is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the last six-month time frame, Brown-Forman Corporation (NYSE:BF.B) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Brown-Forman Corporation (NYSE:BF.B). These stocks are Central European Distribution Corp (NASDAQ:CEDC), Castle Brands Inc (NYSEAMEX:ROX), Diageo plc (ADR) (NYSE:DEO), Constellation Brands, Inc. (NYSE:STZ), and BEAM Inc (NYSE:BEAM). This group of stocks are the members of the beverages – wineries & distillers industry and their market caps are closest to BF.B’s market cap.

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