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Did Hedge Funds Drop The Ball On BJ’s Wholesale Club Holdings, Inc. (BJ) ?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ).

Is BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) a buy right now? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions shrunk by 16 lately. Our calculations also showed that bj isn’t among the 30 most popular stocks among hedge funds. BJ was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 32 hedge funds in our database with BJ holdings at the end of the previous quarter.

If you’d ask most traders, hedge funds are viewed as underperforming, outdated investment vehicles of years past. While there are more than 8000 funds trading at the moment, Our researchers hone in on the aristocrats of this group, approximately 750 funds. Most estimates calculate that this group of people shepherd the lion’s share of all hedge funds’ total capital, and by monitoring their highest performing picks, Insider Monkey has revealed a few investment strategies that have historically beaten the market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

MOORE GLOBAL INVESTMENTS

Let’s check out the latest hedge fund action regarding BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ).

How have hedgies been trading BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ)?

At Q4’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BJ over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds With BJ Positions

The largest stake in BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) was held by Sirios Capital Management, which reported holding $91.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $70.8 million position. Other investors bullish on the company included Simcoe Capital Management, Alyeska Investment Group, and Moore Global Investments.

Since BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) has faced bearish sentiment from the smart money, logic holds that there were a few hedge funds who were dropping their positions entirely by the end of the third quarter. At the top of the heap, John Tompkins’s Tyvor Capital sold off the largest position of the 700 funds watched by Insider Monkey, comprising an estimated $12.5 million in stock. Rob Citrone’s fund, Discovery Capital Management, also cut its stock, about $12.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 16 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ). We will take a look at Belmond Ltd (NYSE:BEL), Versum Materials, Inc. (NYSE:VSM), Spirit Realty Capital Inc (NYSE:SRC), and Wolverine World Wide, Inc. (NYSE:WWW). All of these stocks’ market caps match BJ’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BEL 20 334659 4
VSM 29 491674 8
SRC 19 252031 -2
WWW 12 84588 -1
Average 20 290738 2.25

View table here if you experience formatting issues.

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 $291 million. That figure was $233 million in BJ’s case. Versum Materials, Inc. (NYSE:VSM) is the most popular stock in this table. On the other hand Wolverine World Wide, Inc. (NYSE:WWW) is the least popular one with only 12 bullish hedge fund positions. BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on BJ, though not to the same extent, as the stock returned 23.7% and outperformed the market as well.

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

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