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Do Hedge Funds Love Blucora Inc (BCOR)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Blucora Inc (NASDAQ:BCOR) based on that data.

Is Blucora Inc (NASDAQ:BCOR) a bargain? The best stock pickers are becoming hopeful. The number of long hedge fund positions inched up by 4 lately. Our calculations also showed that BCOR isn’t among the 30 most popular stocks among hedge funds (see the video below). BCOR was in 16 hedge funds’ portfolios at the end of June. There were 12 hedge funds in our database with BCOR holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
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.

BCOR_oct2019

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 Blucora Inc (NASDAQ:BCOR).

What does smart money think about Blucora Inc (NASDAQ:BCOR)?

At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in BCOR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

TUDOR INVESTMENT CORP

The largest stake in Blucora Inc (NASDAQ:BCOR) was held by Renaissance Technologies, which reported holding $83 million worth of stock at the end of March. It was followed by D E Shaw with a $18.1 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Marshall Wace LLP.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the biggest position in Blucora Inc (NASDAQ:BCOR). Citadel Investment Group had $3.4 million invested in the company at the end of the quarter. Jeffrey Jacobowitz’s Simcoe Capital Management also made a $2 million investment in the stock during the quarter. The other funds with brand new BCOR positions are Minhua Zhang’s Weld Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.

Let’s now review hedge fund activity in other stocks similar to Blucora Inc (NASDAQ:BCOR). We will take a look at James River Group Holdings Ltd (NASDAQ:JRVR), Hub Group Inc (NASDAQ:HUBG), TriMas Corp (NASDAQ:TRS), and Brookdale Senior Living, Inc. (NYSE:BKD). This group of stocks’ market caps are similar to BCOR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JRVR 10 40073 -2
HUBG 18 244748 -5
TRS 15 112396 -3
BKD 22 473004 -5
Average 16.25 217555 -3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $128 million in BCOR’s case. Brookdale Senior Living, Inc. (NYSE:BKD) is the most popular stock in this table. On the other hand James River Group Holdings Ltd (NASDAQ:JRVR) is the least popular one with only 10 bullish hedge fund positions. Blucora Inc (NASDAQ:BCOR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately BCOR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BCOR investors were disappointed as the stock returned -28.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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