Is Broadridge Financial Solutions, Inc. (BR) Going to Burn These Hedge Funds?

The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of Broadridge Financial Solutions, Inc. (NYSE:BR) and find out how it is affected by hedge funds’ moves.

Is Broadridge Financial Solutions, Inc. (NYSE:BR) the right investment to pursue these days? Investors who are in the know are buying. The number of long hedge fund bets rose by 6 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Camden Property Trust (NYSE:CPT), Alexandria Real Estate Equities Inc (NYSE:ARE), and Tiffany & Co. (NYSE:TIF) to gather more data points.

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Hedge fund activity in Broadridge Financial Solutions, Inc. (NYSE:BR)

Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a 40% surge from the previous quarter, though the stock’s ownership among hedgies remains lower than what it was a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Broadridge Financial Solutions, Inc. (NYSE:BR). AQR Capital Management has a $78.7 million position in the stock. Sitting at the No. 2 spot is Diamond Hill Capital, led by Ric Dillon, holding a $47.6 million position. Remaining members of the smart money that are bullish include Jim Simons’ Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Joel Greenblatt’s Gotham Asset Management.

As one would reasonably expect, specific money managers were breaking ground themselves. Renaissance Technologies created the largest position in Broadridge Financial Solutions, Inc. (NYSE:BR). Renaissance Technologies had $28.5 million invested in the company at the end of the quarter. Gotham Asset Management also initiated a $12.4 million position during the quarter. The following funds were also among the new BR investors: Matthew Tewksbury’s Stevens Capital Management, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Broadridge Financial Solutions, Inc. (NYSE:BR) but similarly valued. These stocks are Camden Property Trust (NYSE:CPT), Alexandria Real Estate Equities Inc (NYSE:ARE), Tiffany & Co. (NYSE:TIF), and F5 Networks, Inc. (NASDAQ:FFIV). This group of stocks’ market caps match BR’s market cap.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $208 million in BR’s case. Tiffany & Co. (NYSE:TIF) is the most popular stock in this table. On the other hand Camden Property Trust (NYSE:CPT) is the least popular one with only 8 bullish hedge fund positions. Broadridge Financial Solutions, Inc. (NYSE:BR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TIF might be a better candidate to consider a long position in.

Disclosure: None