“October lived up to its scary reputation—the S&P 500 falling in the month by the largest amount in the last 40 years, the only worse Octobers being ’08 and the Crash of ’87. For perspective, there have been only 5 occasions in those 40 years when the S&P 500 declined by greater than 20% from peak to trough. Other than the ’87 Crash, all were during recessions. There were 17 other instances, over the same time frame, when the market fell by over 10% but less than 20%. Furthermore, this is the 18th correction of 5% or more since the current bull market started in March ’09. Corrections are the norm. They can be healthy as they often undo market complacency—overbought levels—potentially allowing the market to base and move even higher.” This is how Trapeze Asset Management summarized the recent market moves in its investor letter. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards one of the stocks hedge funds invest in.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a gander at the latest hedge fund action surrounding Bruker Corporation (NASDAQ:BRKR).
How are hedge funds trading Bruker Corporation (NASDAQ:BRKR)?
Heading into the fourth quarter of 2018, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BRKR over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, D. E. Shaw’s D E Shaw has the largest position in Bruker Corporation (NASDAQ:BRKR), worth close to $73.4 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $50.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism consist of Paul Marshall and Ian Wace’s Marshall Wace LLP, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Seeing as Bruker Corporation (NASDAQ:BRKR) has faced bearish sentiment from the smart money, it’s easy to see that there is a sect of money managers who sold off their entire stakes heading into Q3. At the top of the heap, Steve Cohen’s Point72 Asset Management cut the largest position of all the hedgies monitored by Insider Monkey, worth close to $20.5 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund cut about $1.6 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Bruker Corporation (NASDAQ:BRKR). We will take a look at Inogen Inc (NASDAQ:INGN), Kemper Corporation (NYSE:KMPR), Oshkosh Corporation (NYSE:OSK), and Viper Energy Partners LP (NASDAQ:VNOM). All of these stocks’ market caps resemble BRKR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $250 million in BRKR’s case. Oshkosh Corporation (NYSE:OSK) is the most popular stock in this table. On the other hand Viper Energy Partners LP (NASDAQ:VNOM) is the least popular one with only 12 bullish hedge fund positions. Bruker Corporation (NASDAQ:BRKR) 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. In this regard OSK might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.