World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is BT Group plc (ADR) (NYSE:BT) the right pick for your portfolio? Investors who are in the know are unambiguously getting less bullish. The number of long hedge fund positions shrunk by 4 recently. BT was in 7 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with BT 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 UBS AG (USA) (NYSE:UBS), Canadian National Railway (USA) (NYSE:CNI), and Banco Bradesco SA (ADR) (NYSE:BBD) to gather more data points.
Follow B T Group Plc (NYSE:BT)
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Hedge fund activity in BT Group plc (ADR) (NYSE:BT)
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 36% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in BT heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, one of the biggest hedge funds in the world, holds the number one position in BT Group plc (ADR) (NYSE:BT). Renaissance Technologies has a $101.7 million position in the stock. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $7.1 million position. Remaining professional money managers that are bullish comprise Thomas Bailard’s Bailard Inc, J. Alan Reid, Jr.’s Forward Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Forward Management is 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.
Seeing as BT Group plc (ADR) (NYSE:BT) has gone through bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Charles Davidson’s Wexford Capital sold off the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $1 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $0.6 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BT Group plc (ADR) (NYSE:BT) but similarly valued. These stocks are UBS AG (USA) (NYSE:UBS), Canadian National Railway (USA) (NYSE:CNI), Banco Bradesco SA (ADR) (NYSE:BBD), and Telefonica S.A. (ADR) (NYSE:TEF). This group of stocks’ market values are closest to BT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UBS | 8 | 659901 | -2 |
| CNI | 17 | 1447565 | -4 |
| BBD | 13 | 323892 | 3 |
| TEF | 5 | 7181 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $610 million. That figure was $115 million in BT’s case. Canadian National Railway (USA) (NYSE:CNI) is the most popular stock in this table. On the other hand Telefonica S.A. (ADR) (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. BT Group plc (ADR) (NYSE:BT) 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 CNI might be a better candidate to consider taking a long position in.
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