The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Booz Allen Hamilton Holding Corporation (NYSE:BAH) based on those filings.
Booz Allen Hamilton Holding Corporation (NYSE:BAH) was in 27 hedge funds’ portfolios at the end of March. BAH investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 34 hedge funds in our database with BAH holdings at the end of the previous quarter. Our calculations also showed that BAH 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most investors, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are more than 8000 funds with their doors open at present, Our researchers choose to focus on the leaders of this group, about 850 funds. These money managers preside over the lion’s share of the smart money’s total capital, and by monitoring their inimitable stock picks, Insider Monkey has come up with a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. Now we’re going to take a glance at the key hedge fund action encompassing Booz Allen Hamilton Holding Corporation (NYSE:BAH).
How have hedgies been trading Booz Allen Hamilton Holding Corporation (NYSE:BAH)?
At Q1’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BAH over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Booz Allen Hamilton Holding Corporation (NYSE:BAH), which was worth $91.4 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $45 million worth of shares. Renaissance Technologies, Millennium Management, and Adage Capital Management 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 Game Creek Capital allocated the biggest weight to Booz Allen Hamilton Holding Corporation (NYSE:BAH), around 5.15% of its 13F portfolio. Lunia Capital is also relatively very bullish on the stock, designating 1.48 percent of its 13F equity portfolio to BAH.
Due to the fact that Booz Allen Hamilton Holding Corporation (NYSE:BAH) has faced bearish sentiment from the smart money, we can see that there exists a select few hedge funds who sold off their full holdings by the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $23.1 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $22.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Booz Allen Hamilton Holding Corporation (NYSE:BAH) but similarly valued. We will take a look at Masco Corporation (NYSE:MAS), Agnico Eagle Mines Limited (NYSE:AEM), W.R. Berkley Corporation (NYSE:WRB), and NiSource Inc. (NYSE:NI). All of these stocks’ market caps are similar to BAH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAS | 34 | 489853 | -11 |
| AEM | 25 | 392047 | -9 |
| WRB | 26 | 208286 | -8 |
| NI | 27 | 641894 | -1 |
| Average | 28 | 433020 | -7.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $433 million. That figure was $276 million in BAH’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand Agnico Eagle Mines Limited (NYSE:AEM) is the least popular one with only 25 bullish hedge fund positions. Booz Allen Hamilton Holding Corporation (NYSE:BAH) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately BAH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BAH investors were disappointed as the stock returned 16.2% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Booz Allen Hamilton Holding Corp (NYSE:BAH)
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Disclosure: None. This article was originally published at Insider Monkey.
