Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Things completely reversed during the first half of 2019. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Boise Cascade Company (NYSE:BCC) to find out whether it was one of their high conviction long-term ideas.
Is Boise Cascade Company (NYSE:BCC) a buy right now? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund bets shrunk by 2 in recent months. Our calculations also showed that BCC isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 take a glance at the key hedge fund action encompassing Boise Cascade Company (NYSE:BCC).
Hedge fund activity in Boise Cascade Company (NYSE:BCC)
Heading into the third quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in BCC a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the biggest position in Boise Cascade Company (NYSE:BCC), worth close to $13.6 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $12 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions consist of Noam Gottesman’s GLG Partners, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.
Seeing as Boise Cascade Company (NYSE:BCC) has experienced a decline in interest from the smart money, we can see that there exists a select few funds that decided to sell off their entire stakes in the second quarter. At the top of the heap, David Costen Haley’s HBK Investments said goodbye to the largest investment of all the hedgies tracked by Insider Monkey, worth an estimated $2 million in stock, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital was right behind this move, as the fund cut about $1 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds in the second quarter.
Let’s check out hedge fund activity in other stocks similar to Boise Cascade Company (NYSE:BCC). We will take a look at ARMOUR Residential REIT, Inc. (NYSE:ARR), Fitbit Inc (NYSE:FIT), Funko, Inc. (NASDAQ:FNKO), and Central European Media Enterprises Ltd. (NASDAQ:CETV). This group of stocks’ market caps are closest to BCC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARR | 8 | 66931 | 0 |
| FIT | 13 | 81288 | -5 |
| FNKO | 17 | 97217 | 1 |
| CETV | 8 | 9824 | 1 |
| Average | 11.5 | 63815 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $51 million in BCC’s case. Funko, Inc. (NASDAQ:FNKO) is the most popular stock in this table. On the other hand ARMOUR Residential REIT, Inc. (NYSE:ARR) is the least popular one with only 8 bullish hedge fund positions. Boise Cascade Company (NYSE:BCC) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on BCC as the stock returned 16.3% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
