Hedge Funds Are Crazy About BWX Technologies Inc (BWXT)

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards BWX Technologies Inc (NYSE:BWXT), and what that likely means for the prospects of the company and its stock.

BWX Technologies Inc (NYSE:BWXT) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. At the end of this article we will also compare BWXT to other stocks including Santander Consumer USA Holdings Inc (NYSE:SC), Microsemi Corporation (NASDAQ:MSCC), and BBVA Banco Frances S.A. (ADR) (NYSE:BFR) to get a better sense of its popularity.

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Now, we’re going to take a gander at the fresh action encompassing BWX Technologies Inc (NYSE:BWXT).

What does the smart money think about BWX Technologies Inc (NYSE:BWXT)?

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, 26% up from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Blue Harbour Group, managed by Clifton S. Robbins, holds the biggest position in BWX Technologies Inc (NYSE:BWXT). According to its latest 13F filing, Blue Harbour has a $405.2 million position in the stock, comprising 15% of its 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $93.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Amy Minella’s Cardinal Capital, D. E. Shaw’s D E Shaw and Clint Carlson’s Carlson Capital.

As one would reasonably expect, key money managers were breaking ground themselves. Clinton Group, managed by George Hall, created the most valuable position in BWX Technologies Inc (NYSE:BWXT). The fund reportedly had $1.3 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $1.2 million bet during the quarter. The following funds were also among the new BWXT investors: Brian Taylor’s Pine River Capital Management, Alec Litowitz and Ross Laser’s Magnetar Capital, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BWX Technologies Inc (NYSE:BWXT) but similarly valued. We will take a look at Santander Consumer USA Holdings Inc (NYSE:SC), Microsemi Corporation (NASDAQ:MSCC), BBVA Banco Frances S.A. (ADR) (NYSE:BFR), and CONSOL Energy Inc. (NYSE:CNX). This group of stocks’ market valuations match BWXT’s market valuation.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $583 million. That figure was $787 million in BWXT’s case. CONSOL Energy Inc. (NYSE:CNX) is the most popular stock in this table. On the other hand BBVA Banco Frances S.A. (ADR) (NYSE:BFR) is the least popular one with only 11 bullish hedge fund positions. BWX Technologies Inc (NYSE:BWXT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CNX might be a better candidate to consider a long position.

Disclosure: none.