Hedge Funds Are Ditching Bruker Corporation (BRKR)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Bruker Corporation (NASDAQ:BRKR).

Is Bruker Corporation (NASDAQ:BRKR) a bargain? The smart money is reducing their bets on the stock. The number of long hedge fund bets retreated by 4 recently. Our calculations also showed that BRKR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). BRKR was in 21 hedge funds’ portfolios at the end of March. There were 25 hedge funds in our database with BRKR holdings at the end of the previous quarter.

Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the key hedge fund action regarding Bruker Corporation (NASDAQ:BRKR).

What does smart money think about Bruker Corporation (NASDAQ:BRKR)?

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BRKR over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, D. E. Shaw’s D E Shaw has the largest position in Bruker Corporation (NASDAQ:BRKR), worth close to $40.6 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $20.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions comprise Renaissance Technologies, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Bruker Corporation (NASDAQ:BRKR), around 0.3% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, setting aside 0.27 percent of its 13F equity portfolio to BRKR.

Judging by the fact that Bruker Corporation (NASDAQ:BRKR) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who sold off their full holdings heading into Q4. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the largest investment of the 750 funds monitored by Insider Monkey, worth an estimated $5.7 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $1.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Bruker Corporation (NASDAQ:BRKR). These stocks are Lumentum Holdings Inc (NASDAQ:LITE), Dolby Laboratories, Inc. (NYSE:DLB), Bausch Health Companies Inc. (NYSE:BHC), and Mohawk Industries, Inc. (NYSE:MHK). This group of stocks’ market values are closest to BRKR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LITE 34 487864 -3
DLB 29 374056 -2
BHC 35 1566790 4
MHK 36 585591 -4
Average 33.5 753575 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $754 million. That figure was $110 million in BRKR’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Dolby Laboratories, Inc. (NYSE:DLB) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Bruker Corporation (NASDAQ:BRKR) is even less popular than DLB. Hedge funds dodged a bullet by taking a bearish stance towards BRKR. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately BRKR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BRKR investors were disappointed as the stock returned 15.1% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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