Did Hedge Funds Drop The Ball On Global Brass and Copper Holdings Inc (BRSS)?

Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2018. What do these smart investors think about Global Brass and Copper Holdings Inc (NYSE:BRSS)?

Is Global Brass and Copper Holdings Inc (NYSE:BRSS) a buy, sell, or hold? Money managers are getting less bullish. The number of long hedge fund bets fell by 2 recently. Our calculations also showed that brss isn’t among the 30 most popular stocks among hedge funds. BRSS was in 15 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 17 hedge funds in our database with BRSS 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.

Chuck Royce

We’re going to review the key hedge fund action encompassing Global Brass and Copper Holdings Inc (NYSE:BRSS).

How are hedge funds trading Global Brass and Copper Holdings Inc (NYSE:BRSS)?

At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in BRSS a year ago. So, let’s check 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 BRSS Positions

Among these funds, Renaissance Technologies held the most valuable stake in Global Brass and Copper Holdings Inc (NYSE:BRSS), which was worth $32.6 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $7.3 million worth of shares. Moreover, D E Shaw, Royce & Associates, and Two Sigma Advisors were also bullish on Global Brass and Copper Holdings Inc (NYSE:BRSS), allocating a large percentage of their portfolios to this stock.

Because Global Brass and Copper Holdings Inc (NYSE:BRSS) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few hedgies who sold off their entire stakes last quarter. At the top of the heap, Mike Vranos’s Ellington dropped the biggest investment of the 700 funds monitored by Insider Monkey, totaling about $0.3 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also sold off its stock, about $0.2 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Global Brass and Copper Holdings Inc (NYSE:BRSS) but similarly valued. We will take a look at Equity Bancshares, Inc. (NASDAQ:EQBK), BBX Capital Corporation (NYSE:BBX), SunCoke Energy, Inc (NYSE:SXC), and Briggs & Stratton Corporation (NYSE:BGG). All of these stocks’ market caps match BRSS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EQBK 7 55617 0
BBX 15 43502 0
SXC 17 86878 -4
BGG 10 14547 -5
Average 12.25 50136 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $53 million in BRSS’s case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand Equity Bancshares, Inc. (NASDAQ:EQBK) is the least popular one with only 7 bullish hedge fund positions. Global Brass and Copper Holdings Inc (NYSE:BRSS) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on BRSS as the stock returned 73.6% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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