Here is What Hedge Funds Think About Best Buy Co., Inc. (BBY)

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 Best Buy Co., Inc. (NYSE:BBY).

Best Buy Co., Inc. (NYSE:BBY) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Best Buy Co., Inc. (NYSE:BBY) was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 40. There were 33 hedge funds in our database with BBY positions at the end of the first quarter. Our calculations also showed that BBY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s review the recent hedge fund action surrounding Best Buy Co., Inc. (NYSE:BBY).

Do Hedge Funds Think BBY Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in BBY a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

The largest stake in Best Buy Co., Inc. (NYSE:BBY) was held by AQR Capital Management, which reported holding $282.9 million worth of stock at the end of June. It was followed by Two Sigma Advisors with a $165.2 million position. Other investors bullish on the company included Citadel Investment Group, Alyeska Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Best Buy Co., Inc. (NYSE:BBY), around 2.96% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, dishing out 2.06 percent of its 13F equity portfolio to BBY.

Judging by the fact that Best Buy Co., Inc. (NYSE:BBY) has witnessed falling interest from the smart money, logic holds that there was a specific group of money managers that decided to sell off their full holdings last quarter. At the top of the heap, Clint Carlson’s Carlson Capital sold off the biggest investment of all the hedgies tracked by Insider Monkey, valued at an estimated $9.3 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund dumped about $3.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Best Buy Co., Inc. (NYSE:BBY) but similarly valued. These stocks are Equity Residential (NYSE:EQR), CBRE Group, Inc. (NYSE:CBRE), Energy Transfer L.P. (NYSE:ET), Nucor Corporation (NYSE:NUE), Seagen Inc. (NASDAQ:SGEN), The Kroger Co. (NYSE:KR), and State Street Corporation (NYSE:STT). This group of stocks’ market caps are closest to BBY’s market cap.

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As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $2513 million. That figure was $984 million in BBY’s case. The Kroger Co. (NYSE:KR) is the most popular stock in this table. On the other hand Energy Transfer L.P. (NYSE:ET) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Best Buy Co., Inc. (NYSE:BBY) is even less popular than ET. Our overall hedge fund sentiment score for BBY is 19.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards BBY. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th but managed to beat the market again by 4.5 percentage points. Unfortunately BBY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); BBY investors were disappointed as the stock returned -0.5% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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