With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Bruker Corporation (NASDAQ:BRKR).
Is BRKR a good stock to buy now? Prominent investors were taking a bullish view. The number of bullish hedge fund bets advanced by 3 in recent months. Bruker Corporation (NASDAQ:BRKR) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BRKR 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). There were 28 hedge funds in our database with BRKR positions at the end of the second quarter.
Video: 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 S&P 500 ETFs by 66 percentage points since March 2017 (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.
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. Now we’re going to analyze the recent hedge fund action encompassing Bruker Corporation (NASDAQ:BRKR).
Do Hedge Funds Think BRKR Is A Good Stock To Buy Now?
At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BRKR over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the number one position in Bruker Corporation (NASDAQ:BRKR). D E Shaw has a $32.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Alyeska Investment Group, managed by Anand Parekh, which holds a $20.3 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Renaissance Technologies. In terms of the portfolio weights assigned to each position Pennant Capital Management allocated the biggest weight to Bruker Corporation (NASDAQ:BRKR), around 2.11% of its 13F portfolio. Alyeska Investment Group is also relatively very bullish on the stock, setting aside 0.31 percent of its 13F equity portfolio to BRKR.
Now, some big names were breaking ground themselves. Magnetar Capital, managed by Alec Litowitz and Ross Laser, created the biggest position in Bruker Corporation (NASDAQ:BRKR). Magnetar Capital had $1 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also initiated a $0.6 million position during the quarter. The following funds were also among the new BRKR investors: Bruce Kovner’s Caxton Associates LP, Brandon Haley’s Holocene Advisors, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bruker Corporation (NASDAQ:BRKR) but similarly valued. These stocks are Proofpoint Inc (NASDAQ:PFPT), Natera Inc (NASDAQ:NTRA), Robert Half International Inc. (NYSE:RHI), Manhattan Associates, Inc. (NASDAQ:MANH), LPL Financial Holdings Inc (NASDAQ:LPLA), Huaneng Power International Inc (NYSE:HNP), and Lincoln National Corporation (NYSE:LNC). This group of stocks’ market caps are similar to 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 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $459 million. That figure was $155 million in BRKR’s case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 2 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. Our overall hedge fund sentiment score for BRKR is 73.4. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on BRKR as the stock returned 39.7% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.