It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 4 percentage points during the first 9 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in B&G Foods, Inc. (NYSE:BGS).
B&G Foods, Inc. (NYSE:BGS) was in 20 hedge funds’ portfolios at the end of the second quarter of 2019. BGS has experienced an increase in hedge fund sentiment in recent months. There were 19 hedge funds in our database with BGS holdings at the end of the previous quarter. Our calculations also showed that BGS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, Our researchers hone in on the leaders of this club, approximately 750 funds. It is estimated that this group of investors preside over the majority of the smart money’s total asset base, and by paying attention to their inimitable picks, Insider Monkey has formulated numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
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. Let’s take a peek at the fresh hedge fund action regarding B&G Foods, Inc. (NYSE:BGS).
Hedge fund activity in B&G Foods, Inc. (NYSE:BGS)
At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BGS over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in B&G Foods, Inc. (NYSE:BGS) was held by Cardinal Capital, which reported holding $48.9 million worth of stock at the end of March. It was followed by Diamond Hill Capital with a $31.6 million position. Other investors bullish on the company included GLG Partners, Millennium Management, and Millennium Management.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Weld Capital Management, managed by Minhua Zhang, initiated the biggest position in B&G Foods, Inc. (NYSE:BGS). Weld Capital Management had $2.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors, and David Harding’s Winton Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to B&G Foods, Inc. (NYSE:BGS). These stocks are Materion Corp (NYSE:MTRN), Talos Energy, Inc. (NYSE:TALO), CNX Resources Corporation (NYSE:CNX), and Fate Therapeutics Inc (NASDAQ:FATE). All of these stocks’ market caps are closest to BGS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTRN | 15 | 112610 | -2 |
| TALO | 14 | 66272 | -3 |
| CNX | 21 | 500604 | 0 |
| FATE | 18 | 469864 | 0 |
| Average | 17 | 287338 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $122 million in BGS’s case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Talos Energy, Inc. (NYSE:TALO) is the least popular one with only 14 bullish hedge fund positions. B&G Foods, Inc. (NYSE:BGS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 BGS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BGS were disappointed as the stock returned -6.9% 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.
