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Is Brunswick Corporation (BC) Going to Burn These Hedge Funds?

Is Brunswick Corporation (NYSE:BC) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Brunswick Corporation (NYSE:BC) shareholders have witnessed an increase in hedge fund sentiment of late. Our calculations also showed that BC isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

BC_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the new hedge fund action regarding Brunswick Corporation (NYSE:BC).

Hedge fund activity in Brunswick Corporation (NYSE:BC)

At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in BC a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

William Von Mueffling - Cantillon Capital Management

Among these funds, Lakewood Capital Management held the most valuable stake in Brunswick Corporation (NYSE:BC), which was worth $187.2 million at the end of the second quarter. On the second spot was Cantillon Capital Management which amassed $111.7 million worth of shares. Moreover, Adage Capital Management, D E Shaw, and AQR Capital Management were also bullish on Brunswick Corporation (NYSE:BC), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, some big names were breaking ground themselves. Cantillon Capital Management, managed by William von Mueffling, established the most outsized position in Brunswick Corporation (NYSE:BC). Cantillon Capital Management had $111.7 million invested in the company at the end of the quarter. Arnaud Ajdler’s Engine Capital also made a $13.3 million investment in the stock during the quarter. The following funds were also among the new BC investors: Clint Murray’s Lodge Hill Capital, Frederick DiSanto’s Ancora Advisors, and David Harding’s Winton Capital Management.

Let’s check out hedge fund activity in other stocks similar to Brunswick Corporation (NYSE:BC). We will take a look at Spark Therapeutics Inc (NASDAQ:ONCE), Cushman & Wakefield plc (NYSE:CWK), Pure Storage, Inc. (NYSE:PSTG), and Mattel, Inc. (NASDAQ:MAT). This group of stocks’ market values are similar to BC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ONCE 39 1284491 3
CWK 14 159437 -12
PSTG 23 561696 2
MAT 16 650888 -5
Average 23 664128 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $664 million. That figure was $540 million in BC’s case. Spark Therapeutics Inc (NASDAQ:ONCE) is the most popular stock in this table. On the other hand Cushman & Wakefield plc (NYSE:CWK) is the least popular one with only 14 bullish hedge fund positions. Brunswick Corporation (NYSE:BC) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BC as the stock returned 14.1% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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