In this article we are going to use hedge fund sentiment as a tool and determine whether Berry Corporation (NASDAQ:BRY) is a good investment 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.
Is BRY a good stock to buy now? Berry Corporation (NASDAQ:BRY) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that BRY 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). 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 Veritone, Inc. (NASDAQ:VERI), Trilogy Metals Inc. (NYSE:TMQ), and CalAmp Corp. (NASDAQ:CAMP) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 take a look at the key hedge fund action regarding Berry Corporation (NASDAQ:BRY).
Do Hedge Funds Think BRY Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in BRY 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, Oaktree Capital Management held the most valuable stake in Berry Corporation (NASDAQ:BRY), which was worth $40.9 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $1.4 million worth of shares. SailingStone Capital Partners, Millennium 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 Oaktree Capital Management allocated the biggest weight to Berry Corporation (NASDAQ:BRY), around 0.89% of its 13F portfolio. SailingStone Capital Partners is also relatively very bullish on the stock, earmarking 0.47 percent of its 13F equity portfolio to BRY.
Because Berry Corporation (NASDAQ:BRY) has faced falling interest from the smart money, we can see that there was a specific group of money managers that decided to sell off their positions entirely last quarter. It’s worth mentioning that Peter Muller’s PDT Partners said goodbye to the biggest stake of the 750 funds watched by Insider Monkey, comprising about $0.1 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $0.1 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Berry Corporation (NASDAQ:BRY) but similarly valued. We will take a look at Veritone, Inc. (NASDAQ:VERI), Trilogy Metals Inc. (NYSE:TMQ), CalAmp Corp. (NASDAQ:CAMP), Hanmi Financial Corp (NASDAQ:HAFC), CNB Financial Corporation (NASDAQ:CCNE), Aspen Group Inc. (NASDAQ:ASPU), and AXT Inc (NASDAQ:AXTI). All of these stocks’ market caps resemble BRY’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 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $46 million in BRY’s case. Hanmi Financial Corp (NASDAQ:HAFC) is the most popular stock in this table. On the other hand Veritone, Inc. (NASDAQ:VERI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Berry Corporation (NASDAQ:BRY) is more popular among hedge funds. Our overall hedge fund sentiment score for BRY is 76. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on BRY as the stock returned 22.7% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.