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Did Hedge Funds Drop The Ball On BrightView Holdings, Inc. (BV) ?

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 BrightView Holdings, Inc. (NYSE:BV).

Is BrightView Holdings, Inc. (NYSE:BV) a healthy stock for your portfolio? Money managers are selling. The number of long hedge fund bets retreated by 3 lately. Our calculations also showed that BV isn’t among the 30 most popular stocks among hedge funds. BV was in 10 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 13 hedge funds in our database with BV holdings at the end of the previous quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

John Overdeck of Two Sigma

We’re going to review the fresh hedge fund action regarding BrightView Holdings, Inc. (NYSE:BV).

How have hedgies been trading BrightView Holdings, Inc. (NYSE:BV)?

At the end of the fourth quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BV 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.

BV_apr2019

Among these funds, Broad Bay Capital held the most valuable stake in BrightView Holdings, Inc. (NYSE:BV), which was worth $12.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $9.5 million worth of shares. Moreover, Claar Advisors, BlueMar Capital Management, and Marshall Wace LLP were also bullish on BrightView Holdings, Inc. (NYSE:BV), allocating a large percentage of their portfolios to this stock.

Due to the fact that BrightView Holdings, Inc. (NYSE:BV) has faced bearish sentiment from the smart money, it’s easy to see that there is a sect of fund managers that decided to sell off their full holdings by the end of the third quarter. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management dropped the largest investment of the 700 funds followed by Insider Monkey, valued at close to $16.1 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $3.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to BrightView Holdings, Inc. (NYSE:BV). We will take a look at Saul Centers Inc (NYSE:BFS), Rowan Companies plc (NYSE:RDC), Core-Mark Holding Company, Inc. (NASDAQ:CORE), and Corporacion America Airports SA (NYSE:CAAP). This group of stocks’ market values are similar to BV’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BFS 7 25253 0
RDC 18 356998 -13
CORE 20 39166 1
CAAP 13 39053 -1
Average 14.5 115118 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $36 million in BV’s case. Core-Mark Holding Company, Inc. (NASDAQ:CORE) is the most popular stock in this table. On the other hand Saul Centers Inc (NYSE:BFS) is the least popular one with only 7 bullish hedge fund positions. BrightView Holdings, Inc. (NYSE:BV) 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 BV as the stock returned 56.6% and outperformed the market by an even larger margin.

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

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