Brown Capital Management Mid Company Fund recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 6.15% (inst. class) for the quarter, underperforming its benchmark, the Russell Midcap Growth Index which returned 9.4% in the same quarter. You should check out Brown Capital Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, Brown Capital Management highlighted a few stocks and Bright Horizons Family Solutions Inc. (NYSE:BFAM) is one of them. Bright Horizons Family Solutions Inc. (NYSE:BFAM) is a child-care provider. Year-to-date, Bright Horizons Family Solutions Inc. (NYSE:BFAM) stock gained 13.8% and on December 15th it had a closing price of $170.96. Here is what Brown Capital Management said:
“Bright Horizons Family Solutions is the leading provider of employer-sponsored childcare and earlychildhood education, with more than 1,000 full-service centers across the U.S., the U.K. and the Netherlands. The company also offers back-up dependent care and educational-advisory services. The company is substantially larger than its closest competitor, boasting more than one-third of the Fortune 500 as clients.
Earlier this year, the global pandemic led Bright Horizons to temporarily close more than 80% of its centers, leaving open only those serving children of essential employees. As of March 19, 2020, shares had declined 53% year to date. We added to our position in late March as we believed the company’s largely white-collar customer base would be eager to use Bright Horizon’s service regardless of whether a post-COVID-19 environment was dominated by working in the office or from home. At the time of our purchase, we noted that a quarter of preschoolers are enrolled in childcare centers and that this percentage has been remarkably consistent for the past 30 years. During this period of uncertainty, Bright Horizons had a manageable debt load but it improved its liquidity by raising $250 million of cash from investors. Recently, shares appreciated because the company’s COVID-19 protocols have proven successful, with the company reopening 65% of centers and guiding that it will have more than 85% of centers reopened by the end of the third quarter. With less than 10% of U.S. companies offering childcare benefits, we believe Bright Horizons has many more years of high-single-digit revenue growth and low-tomid-teens earnings growth once all centers resume operation.”
In Q2 2020, the number of bullish hedge fund positions on Bright Horizons Family Solutions Inc. (NYSE:BFAM) stock increased by about 11% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in BFAM’s growth potential. Our calculations showed that Bright Horizons Family Solutions Inc. (NYSE:BFAM) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.