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Belden Inc. (BDC): Are Hedge Funds Right About This Stock?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Belden Inc. (NYSE:BDC).

Belden Inc. (NYSE:BDC) was in 13 hedge funds’ portfolios at the end of September. BDC investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with BDC positions at the end of the previous quarter. Our calculations also showed that BDC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are dozens of formulas market participants employ to evaluate publicly traded companies. Two of the most innovative formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outpace the S&P 500 by a very impressive amount (see the details here).

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a glance at the recent hedge fund action encompassing Belden Inc. (NYSE:BDC).

Hedge fund activity in Belden Inc. (NYSE:BDC)

Heading into the fourth quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in BDC over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Belden Inc. (NYSE:BDC), which was worth $23.1 million at the end of the third quarter. On the second spot was D E Shaw which amassed $17.9 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Gotham Asset Management allocated the biggest weight to Belden Inc. (NYSE:BDC), around 0.05% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to BDC.

Since Belden Inc. (NYSE:BDC) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedgies who sold off their positions entirely last quarter. Interestingly, Israel Englander’s Millennium Management dropped the biggest position of the 750 funds followed by Insider Monkey, worth close to $3.7 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $1.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Belden Inc. (NYSE:BDC). These stocks are Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Simmons First National Corporation (NASDAQ:SFNC), Lexington Realty Trust (NYSE:LXP), and ABM Industries Incorporated (NYSE:ABM). This group of stocks’ market caps match BDC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RETA 20 212229 5
SFNC 10 31824 -2
LXP 13 108269 1
ABM 14 53080 4
Average 14.25 101351 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $77 million in BDC’s case. Reata Pharmaceuticals, Inc. (NASDAQ:RETA) is the most popular stock in this table. On the other hand Simmons First National Corporation (NASDAQ:SFNC) is the least popular one with only 10 bullish hedge fund positions. Belden Inc. (NYSE:BDC) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BDC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BDC investors were disappointed as the stock returned 0.7% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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