Breeze-Eastern Corp (BZC): Are Hedge Funds Right About This Stock?

The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Breeze-Eastern Corp (NYSEMKT:BZC) and see how it was affected.

Hedge fund interest in Breeze-Eastern Corp (NYSEMKT:BZC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Silvercrest Asset Management Group Inc (NASDAQ:SAMG), Gold Resource Corporation (NYSEMKT:GORO), and Codexis, Inc. (NASDAQ:CDXS) to gather more data points.

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According to most investors, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are more than 8000 funds trading at present, our experts choose to focus on the bigwigs of this group, approximately 700 funds. These investment experts command most of the smart money’s total asset base, and by observing their top picks, Insider Monkey has unearthed various investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to take a glance at the fresh action surrounding Breeze-Eastern Corp (NYSEMKT:BZC).

What have hedge funds been doing with Breeze-Eastern Corp (NYSEMKT:BZC)?

At the end of Q3, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat over the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Wynnefield Capital, managed by Nelson Obus, holds the biggest position in Breeze-Eastern Corp (NYSEMKT:BZC). Wynnefield Capital has a $29.6 million position in the stock, comprising 11.9% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $0.7 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions comprise Chuck Royce’s Royce & Associates, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital .