BMC Stock Holdings, Inc. (BMCH): Hedge Funds Are Still Bullish Despite Some Sales

Is BMC Stock Holdings, Inc. (NASDAQ:BMCH) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is BMC Stock Holdings, Inc. (NASDAQ:BMCH) a good investment now? Prominent investors are getting less optimistic. The number of bullish hedge fund positions dropped by 4 in recent months. Our calculations also showed that BMCH isn’t among the 30 most popular stocks among hedge funds (see the video below). BMCH was in 25 hedge funds’ portfolios at the end of the second quarter of 2019. There were 29 hedge funds in our database with BMCH holdings at the end of the previous quarter. Overall hedge fund sentiment towards BMCH is still positive as you can see below.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most market participants, hedge funds are perceived as worthless, old investment tools of yesteryear. While there are more than 8000 funds trading today, Our experts hone in on the crème de la crème of this club, about 750 funds. These investment experts shepherd most of the smart money’s total capital, and by observing their best equity investments, Insider Monkey has unearthed numerous investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .


Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the latest hedge fund action surrounding BMC Stock Holdings, Inc. (NASDAQ:BMCH).

How are hedge funds trading BMC Stock Holdings, Inc. (NASDAQ:BMCH)?

Heading into the third quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BMCH over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Crispin Odey

The largest stake in BMC Stock Holdings, Inc. (NASDAQ:BMCH) was held by Coliseum Capital, which reported holding $53.9 million worth of stock at the end of March. It was followed by Raging Capital Management with a $31.5 million position. Other investors bullish on the company included Lakewood Capital Management, Odey Asset Management Group, and ACK Asset Management.

Due to the fact that BMC Stock Holdings, Inc. (NASDAQ:BMCH) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds that slashed their entire stakes in the second quarter. Interestingly, Clint Carlson’s Carlson Capital dumped the biggest position of the “upper crust” of funds followed by Insider Monkey, worth about $3.6 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dumped its stock, about $1.6 million worth. These moves are interesting, as total hedge fund interest fell by 4 funds in the second quarter.

Let’s check out hedge fund activity in other stocks similar to BMC Stock Holdings, Inc. (NASDAQ:BMCH). These stocks are Cloudera, Inc. (NYSE:CLDR), Papa John’s International, Inc. (NASDAQ:PZZA), James River Group Holdings Ltd (NASDAQ:JRVR), and Hub Group Inc (NASDAQ:HUBG). All of these stocks’ market caps are similar to BMCH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLDR 25 129316 -7
PZZA 22 332227 0
JRVR 10 40073 -2
HUBG 18 244748 -5
Average 18.75 186591 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $243 million in BMCH’s case. Cloudera, Inc. (NYSE:CLDR) is the most popular stock in this table. On the other hand James River Group Holdings Ltd (NASDAQ:JRVR) is the least popular one with only 10 bullish hedge fund positions. BMC Stock Holdings, Inc. (NASDAQ:BMCH) has the same popularity rating as the most popular stock in this group. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BMCH as the stock returned 23.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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