Hedge Funds Never Been Less Bullish On Briggs & Stratton Corporation (BGG)

In this article we will take a look at whether hedge funds think Briggs & Stratton Corporation (NYSE:BGG) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Briggs & Stratton Corporation (NYSE:BGG) a cheap investment right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions were trimmed by 4 lately. Our calculations also showed that BGG 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). BGG was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. There were 8 hedge funds in our database with BGG holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

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. 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 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s take a gander at the recent hedge fund action regarding Briggs & Stratton Corporation (NYSE:BGG).

What does smart money think about Briggs & Stratton Corporation (NYSE:BGG)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BGG over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Thomas E. Claugus’s GMT Capital has the largest position in Briggs & Stratton Corporation (NYSE:BGG), worth close to $4.2 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position GMT Capital allocated the biggest weight to Briggs & Stratton Corporation (NYSE:BGG), around 0.23% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.0042 percent of its 13F equity portfolio to BGG.

Due to the fact that Briggs & Stratton Corporation (NYSE:BGG) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there is a sect of hedge funds who sold off their entire stakes heading into Q4. Intriguingly, D. E. Shaw’s D E Shaw dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $4.7 million in stock. Michael Lowenstein’s fund, Kensico Capital, also sold off its stock, about $4.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Briggs & Stratton Corporation (NYSE:BGG) but similarly valued. We will take a look at Clearside Biomedical, Inc. (NASDAQ:CLSD), Catalyst Biosciences Inc (NASDAQ:CBIO), Gulfport Energy Corporation (NASDAQ:GPOR), and Navios Maritime Acquisition Corp (NYSE:NNA). This group of stocks’ market values resemble BGG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLSD 4 944 1
CBIO 12 29102 -3
GPOR 9 15568 -6
NNA 4 1726 -2
Average 7.25 11835 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $5 million in BGG’s case. Catalyst Biosciences Inc (NASDAQ:CBIO) is the most popular stock in this table. On the other hand Clearside Biomedical, Inc. (NASDAQ:CLSD) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Briggs & Stratton Corporation (NYSE:BGG) is even less popular than CLSD. Hedge funds dodged a bullet by taking a bearish stance towards BGG. 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 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately BGG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); BGG investors were disappointed as the stock returned -9.4% during the second quarter (through the end of May) 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.