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 September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Balchem Corporation (NASDAQ:BCPC) based on those filings.
Is BCPC a good stock to buy now? Balchem Corporation (NASDAQ:BCPC) was in 16 hedge funds’ portfolios at the end of September. The all time high for this statistic is 17. BCPC investors should pay attention to a decrease in hedge fund sentiment recently. There were 17 hedge funds in our database with BCPC positions at the end of the second quarter. Our calculations also showed that BCPC isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the 21st century investor’s toolkit there are a multitude of methods stock market investors put to use to analyze publicly traded companies. A pair of the less known methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best money managers can outpace the broader indices by a superb amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to go over the fresh hedge fund action surrounding Balchem Corporation (NASDAQ:BCPC).
Do Hedge Funds Think BCPC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in BCPC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Balchem Corporation (NASDAQ:BCPC), which was worth $35.5 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $12.8 million worth of shares. Royce & Associates, Citadel Investment Group, and Horizon Asset 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 PDT Partners allocated the biggest weight to Balchem Corporation (NASDAQ:BCPC), around 0.17% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to BCPC.
Seeing as Balchem Corporation (NASDAQ:BCPC) has experienced a decline in interest from the smart money, logic holds that there were a few hedgies who sold off their entire stakes last quarter. At the top of the heap, Noam Gottesman’s GLG Partners cut the largest investment of the 750 funds monitored by Insider Monkey, valued at about $4.3 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $1.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Balchem Corporation (NASDAQ:BCPC). These stocks are Verint Systems Inc. (NASDAQ:VRNT), AAON, Inc. (NASDAQ:AAON), Harmony Gold Mining Co. (NYSE:HMY), H&R Block, Inc. (NYSE:HRB), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), First Citizens BancShares Inc. (NASDAQ:FCNCA), and Perspecta Inc. (NYSE:PRSP). This group of stocks’ market valuations match BCPC’s market valuation.
|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 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $76 million in BCPC’s case. Perspecta Inc. (NYSE:PRSP) is the most popular stock in this table. On the other hand Harmony Gold Mining Co. (NYSE:HMY) is the least popular one with only 10 bullish hedge fund positions. Balchem Corporation (NASDAQ:BCPC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BCPC is 43.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on BCPC as the stock returned 12.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.