Are Hedge Funds Right About BorgWarner Inc. (BWA)?

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Columbus Circle Investors, managed by Principal Global Investors, established the largest position in BorgWarner Inc. (NYSE:BWA). According to regulatory filings, the fund had $14 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $4.7 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management and Alex Snow’s Lansdowne Partners.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BorgWarner Inc. (NYSE:BWA) but similarly valued. These stocks are iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB), American Financial Group (NYSE:AFG), Flextronics International Ltd. (NASDAQ:FLEX), and Rollins, Inc. (NYSE:ROL). This group of stocks’ market caps are similar to BWA’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $514 million. That figure was $557 million in BWA’s case. Flextronics International Ltd. (NASDAQ:FLEX) is the most popular stock in this table. On the other hand Rollins, Inc. (NYSE:ROL) is the least popular one with only 11 bullish hedge fund positions. BorgWarner Inc. (NYSE:BWA) 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 FLEX might be a better candidate to consider a long position in.

Disclosure: None