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Hedge Funds Are Warming Up To BWX Technologies Inc (BWXT)?

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards BWX Technologies Inc (NYSE:BWXT).

BWX Technologies Inc (NYSE:BWXT) has experienced an increase in hedge fund sentiment of late. BWXT was in 19 hedge funds’ portfolios at the end of the second quarter of 2019. There were 18 hedge funds in our database with BWXT positions at the end of the previous quarter. Our calculations also showed that BWXT isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Levin of Levin Capital

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 peek at the new hedge fund action encompassing BWX Technologies Inc (NYSE:BWXT).

How are hedge funds trading BWX Technologies Inc (NYSE:BWXT)?

At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BWXT over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

BWXT_oct2019

The largest stake in BWX Technologies Inc (NYSE:BWXT) was held by Alkeon Capital Management, which reported holding $46.6 million worth of stock at the end of March. It was followed by Two Sigma Advisors with a $17.5 million position. Other investors bullish on the company included MSDC Management, Citadel Investment Group, and Ancora Advisors.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in BWX Technologies Inc (NYSE:BWXT). Marshall Wace LLP had $1.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, John A. Levin’s Levin Capital Strategies, and Murray Stahl’s Horizon Asset Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BWX Technologies Inc (NYSE:BWXT) but similarly valued. These stocks are Portland General Electric Company (NYSE:POR), Shell Midstream Partners LP (NYSE:SHLX), GDS Holdings Limited (NASDAQ:GDS), and Equitrans Midstream Corporation (NYSE:ETRN). This group of stocks’ market valuations match BWXT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
POR 18 280297 -1
SHLX 5 11536 -2
GDS 28 1106492 -5
ETRN 16 551346 -3
Average 16.75 487418 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $487 million. That figure was $106 million in BWXT’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 5 bullish hedge fund positions. BWX Technologies Inc (NYSE:BWXT) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on BWXT as the stock returned 10.1% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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