Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
Best Buy Co., Inc. (NYSE:BBY) investors should pay attention to a decrease in support from the world’s most elite money managers of late. At the end of this article we will also compare BBY to other stocks including Agrium Inc. (USA) (NYSE:AGU), Fidelity National Financial Inc (NYSE:FNF), and FleetCor Technologies, Inc. (NYSE:FLT) to get a better sense of its popularity.
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In the financial world, there are a lot of indicators market participants use to appraise stocks. A duo of the most innovative indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the S&P 500 by a solid margin (see the details here).
With all of this in mind, we’re going to take a look at the recent action encompassing Best Buy Co., Inc. (NYSE:BBY).
What have hedge funds been doing with Best Buy Co., Inc. (NYSE:BBY)?
Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the second quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Best Buy Co., Inc. (NYSE:BBY), worth close to $237.5 million, corresponding to 0.5% of its total 13F portfolio. The second most bullish fund is David Harding’s Winton Capital Management, with a $154 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions contain Ken Griffin’s Citadel Investment Group, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital and William Harnisch’s Peconic Partners LLC.
Since Best Buy Co., Inc. (NYSE:BBY) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedgies who sold off their positions entirely by the end of the third quarter. At the top of the heap, Curtis Macnguyen’s Ivory Capital (Investment Mgmt) dropped the largest stake of the “upper crust” of funds followed by Insider Monkey, worth about $59 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also said goodbye to its stock, about $24.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 6 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Best Buy Co., Inc. (NYSE:BBY). We will take a look at Agrium Inc. (USA) (NYSE:AGU), Fidelity National Financial Inc (NYSE:FNF), FleetCor Technologies, Inc. (NYSE:FLT), and AMETEK, Inc. (NYSE:AME). This group of stocks’ market caps match BBY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGU | 20 | 1183360 | -9 |
| FNF | 47 | 2102715 | 0 |
| FLT | 52 | 4800114 | -2 |
| AME | 16 | 624993 | -2 |
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $2.18 billion, versus $700 million in BBY’s case. FleetCor Technologies, Inc. (NYSE:FLT) is the most popular stock in this table. On the other hand AMETEK, Inc. (NYSE:AME) is the least popular one with only 16 bullish hedge fund positions. Best Buy Co., Inc. (NYSE:BBY) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FLT might be a better candidate to consider a long position.
