Should I Buy BG Staffing Inc (BGSF)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about BG Staffing Inc (NYSE:BGSF) in this article.

Is BG Staffing Inc (NYSE:BGSF) a cheap stock to buy now? Hedge funds were becoming more confident. The number of bullish hedge fund bets inched up by 3 recently. BG Staffing Inc (NYSE:BGSF) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that BGSF 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most traders, hedge funds are perceived as worthless, old investment tools of years past. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the moguls of this group, around 850 funds. These hedge fund managers have their hands on the lion’s share of the smart money’s total asset base, and by keeping an eye on their inimitable stock picks, Insider Monkey has formulated a few investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Bernard Horn of Polaris Capital Management

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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 take a look at the recent hedge fund action encompassing BG Staffing Inc (NYSE:BGSF).

How are hedge funds trading BG Staffing Inc (NYSE:BGSF)?

Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in BGSF a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Polaris Capital Management, managed by Bernard Horn, holds the biggest position in BG Staffing Inc (NYSE:BGSF). Polaris Capital Management has a $1.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Polaris Capital Management’s heels is Renaissance Technologies, holding a $0.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Harding’s Winton Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Polaris Capital Management allocated the biggest weight to BG Staffing Inc (NYSE:BGSF), around 0.05% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to BGSF.

As industrywide interest jumped, specific money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, created the most valuable position in BG Staffing Inc (NYSE:BGSF). D E Shaw had $0.1 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BG Staffing Inc (NYSE:BGSF) but similarly valued. These stocks are Immutep Limited (NASDAQ:IMMP), Borr Drilling Limited (NYSE:BORR), OP Bancorp (NASDAQ:OPBK), Bank7 Corp. (NASDAQ:BSVN), Avino Silver & Gold Mines Ltd. (NYSE:ASM), FedNat Holding Co (NASDAQ:FNHC), and Abeona Therapeutics Inc (NASDAQ:ABEO). This group of stocks’ market caps are closest to BGSF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IMMP 1 66 0
BORR 6 1637 1
OPBK 4 5883 0
BSVN 2 474 0
ASM 3 342 0
FNHC 7 6542 -1
ABEO 14 17856 -4
Average 5.3 4686 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.3 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $3 million in BGSF’s case. Abeona Therapeutics Inc (NASDAQ:ABEO) is the most popular stock in this table. On the other hand Immutep Limited (NASDAQ:IMMP) is the least popular one with only 1 bullish hedge fund positions. BG Staffing Inc (NYSE:BGSF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BGSF is 61.6. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on BGSF as the stock returned 52% since the end of Q3 (through 12/2) 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.