Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Burford Capital Limited (NYSE:BUR) changed recently.
Burford Capital Limited (NYSE:BUR) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. BUR investors should pay attention to a decrease in enthusiasm from smart money lately. There were 7 hedge funds in our database with BUR holdings at the end of December. Our calculations also showed that BUR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
William Gray of Orbis Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s view the fresh hedge fund action encompassing Burford Capital Limited (NYSE:BUR).
Do Hedge Funds Think BUR Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in BUR over the last 23 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Orbis Investment Management was the largest shareholder of Burford Capital Limited (NYSE:BUR), with a stake worth $21 million reported as of the end of March. Trailing Orbis Investment Management was Arrowstreet Capital, which amassed a stake valued at $3.8 million. Springhouse Capital Management, Glendon Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Springhouse Capital Management allocated the biggest weight to Burford Capital Limited (NYSE:BUR), around 2.45% of its 13F portfolio. Glendon Capital Management is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to BUR.
Judging by the fact that Burford Capital Limited (NYSE:BUR) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies that decided to sell off their full holdings by the end of the first quarter. It’s worth mentioning that James Thomas Berylson’s Berylson Capital Partners said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, valued at an estimated $8 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also cut its stock, about $2.4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Burford Capital Limited (NYSE:BUR) but similarly valued. These stocks are La-Z-Boy Incorporated (NYSE:LZB), Columbia Property Trust Inc (NYSE:CXP), Goldman Sachs BDC, Inc. (NYSE:GSBD), American Assets Trust, Inc (NYSE:AAT), Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY), InterDigital, Inc. (NASDAQ:IDCC), and Service Properties Trust (NASDAQ:SVC). This group of stocks’ market caps are similar to BUR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LZB | 24 | 110904 | 11 |
| CXP | 12 | 62630 | -1 |
| GSBD | 5 | 5208 | 3 |
| AAT | 12 | 19323 | -2 |
| SNCY | 20 | 173113 | 20 |
| IDCC | 15 | 273221 | -3 |
| SVC | 18 | 153253 | -2 |
| Average | 15.1 | 113950 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $30 million in BUR’s case. La-Z-Boy Incorporated (NYSE:LZB) is the most popular stock in this table. On the other hand Goldman Sachs BDC, Inc. (NYSE:GSBD) is the least popular one with only 5 bullish hedge fund positions. Burford Capital Limited (NYSE:BUR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BUR is 32.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on BUR as the stock returned 19.4% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.
Follow Burford Capital Ltd
Follow Burford Capital Ltd
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 12 Best Vacation Stocks to Buy Now
- 15 Biggest Power Companies In The World
Disclosure: None. This article was originally published at Insider Monkey.
