Is BWXT A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards BWX Technologies Inc (NYSE:BWXT).

Is BWXT a good stock to buy now? The best stock pickers were getting less bullish. The number of bullish hedge fund bets dropped by 6 in recent months. BWX Technologies Inc (NYSE:BWXT) was in 21 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 34. Our calculations also showed that BWXT 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 27 hedge funds in our database with BWXT 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

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. Keeping this in mind we’re going to review the latest hedge fund action encompassing BWX Technologies Inc (NYSE:BWXT).

Do Hedge Funds Think BWXT Is A Good Stock To Buy Now?

At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BWXT over the last 21 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

More specifically, Cardinal Capital was the largest shareholder of BWX Technologies Inc (NYSE:BWXT), with a stake worth $79.5 million reported as of the end of September. Trailing Cardinal Capital was Citadel Investment Group, which amassed a stake valued at $31 million. Arrowstreet Capital, GLG Partners, 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 Cardinal Capital allocated the biggest weight to BWX Technologies Inc (NYSE:BWXT), around 3.32% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, designating 1.95 percent of its 13F equity portfolio to BWXT.

Since BWX Technologies Inc (NYSE:BWXT) has experienced falling interest from the aggregate hedge fund industry, logic holds that there were a few funds that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital dropped the biggest position of the “upper crust” of funds followed by Insider Monkey, valued at about $2.1 million in stock, and Qing Li’s Sciencast Management was right behind this move, as the fund dumped about $0.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 6 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BWX Technologies Inc (NYSE:BWXT) but similarly valued. We will take a look at Pearson PLC (NYSE:PSO), CACI International Inc (NYSE:CACI), Planet Fitness Inc (NYSE:PLNT), HUYA Inc. (NYSE:HUYA), Comerica Incorporated (NYSE:CMA), Elbit Systems Ltd. (NASDAQ:ESLT), and Canopy Growth Corporation (NASDAQ:CGC). This group of stocks’ market values resemble BWXT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSO 5 16445 -2
CACI 31 575408 -3
PLNT 45 1552569 1
HUYA 22 390686 1
CMA 30 453794 -6
ESLT 4 10024 0
CGC 9 19074 -2
Average 20.9 431143 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $431 million. That figure was $166 million in BWXT’s case. Planet Fitness Inc (NYSE:PLNT) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 4 bullish hedge fund positions. BWX Technologies Inc (NYSE:BWXT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BWXT is 38.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately BWXT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BWXT were disappointed as the stock returned 8.9% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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