Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Brown-Forman Corporation (NYSE:BF)? The smart money sentiment can provide an answer to this question.
Is Brown-Forman Corporation (NYSE:BF) a good investment now? Hedge funds are getting less optimistic. The number of long hedge fund positions were trimmed by 3 in recent months. At the end of this article we will also compare BF to other stocks including Canadian Pacific Railway Limited (USA) (NYSE:CP), Hormel Foods Corporation (NYSE:HRL), and Omnicom Group Inc. (NYSE:OMC) to get a better sense of its popularity.
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.
How have hedgies been trading Brown-Forman Corporation (NYSE:BF)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 13% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Tom Russo’s Gardner Russo & Gardner has the most valuable position in Brown-Forman Corporation (NYSE:BF), worth close to $235.3 million, corresponding to 2% of its total 13F portfolio. On Gardner Russo & Gardner’s heels is Chilton Investment Company, managed by Richard Chilton, which holds a $78.7 million position; 3.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Mario Gabelli’s GAMCO Investors, Tom Russo’s Gardner Russo & Gardner and Tom Gayner’s Markel Gayner Asset Management.