Is Boise Cascade Co (NYSE:BCC) 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.
Boise Cascade Co (NYSE:BCC) was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. BCC has seen an increase in activity from the world’s largest hedge funds of late. There were 11 hedge funds in our database with BCC positions at the end of the previous quarter. Our calculations also showed that BCC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to review the key hedge fund action surrounding Boise Cascade Co (NYSE:BCC).
How are hedge funds trading Boise Cascade Co (NYSE:BCC)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in BCC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Boise Cascade Co (NYSE:BCC), which was worth $15.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $5.8 million worth of shares. Marshall Wace, AQR Capital Management, and Renaissance Technologies 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 Algert Coldiron Investors allocated the biggest weight to Boise Cascade Co (NYSE:BCC), around 0.16% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to BCC.
As one would reasonably expect, some big names were leading the bulls’ herd. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, established the biggest position in Boise Cascade Co (NYSE:BCC). Algert Coldiron Investors had $0.4 million invested in the company at the end of the quarter. Jonathan Soros’s JS Capital also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Minhua Zhang’s Weld Capital Management and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Boise Cascade Co (NYSE:BCC) but similarly valued. These stocks are Shutterstock Inc (NYSE:SSTK), Perficient, Inc. (NASDAQ:PRFT), Pampa Energia S.A. (NYSE:PAM), and S & T Bancorp Inc (NASDAQ:STBA). This group of stocks’ market caps resemble BCC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSTK | 15 | 79364 | -3 |
| PRFT | 15 | 63971 | -1 |
| PAM | 10 | 64708 | -2 |
| STBA | 10 | 24720 | -1 |
| Average | 12.5 | 58191 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $53 million in BCC’s case. Shutterstock Inc (NYSE:SSTK) is the most popular stock in this table. On the other hand Pampa Energia S.A. (NYSE:PAM) is the least popular one with only 10 bullish hedge fund positions. Boise Cascade Co (NYSE:BCC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on BCC as the stock returned 19.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
