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Hedge Funds Aren’t Crazy About BGC Partners, Inc. (BGCP) Anymore

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Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Is BGC Partners, Inc. (NASDAQ:BGCP) a bargain? The smart money is becoming less confident. The number of long hedge fund positions that are disclosed in regulatory 13F filings slashed by 2 lately. BGCP was in 18 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with BGCP positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Summit Materials Inc (NYSE:SUM), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), and Lexington Realty Trust (NYSE:LXP) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about BGC Partners, Inc. (NASDAQ:BGCP)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 10% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in BGCP over the last 5 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

HedgeFundSentimentChart

When looking at the institutional investors followed by Insider Monkey, Amy Minella’s Cardinal Capital holds the biggest position in BGC Partners, Inc. (NASDAQ:BGCP). Cardinal Capital has a $65.3 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies, with a $7.9 million position. Remaining members of the smart money with similar optimism comprise Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel Investment Group and David Rodriguez-Fraile’s BlueMar Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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