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Should You Avoid Benchmark Electronics, Inc. (BHE)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Benchmark Electronics, Inc. (NYSE:BHE).

Benchmark Electronics, Inc. (NYSE:BHE) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. Our calculations also showed that BHE isn’t among the 30 most popular stocks among hedge funds.

Today there are tons of methods stock traders put to use to evaluate their holdings. A couple of the less utilized methods are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite investment managers can outperform the broader indices by a very impressive amount (see the details here).

RENAISSANCE TECHNOLOGIES

Let’s take a peek at the fresh hedge fund action regarding Benchmark Electronics, Inc. (NYSE:BHE).

How have hedgies been trading Benchmark Electronics, Inc. (NYSE:BHE)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in BHE heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

No of Hedge Funds BHE Positions

Among these funds, Engaged Capital held the most valuable stake in Benchmark Electronics, Inc. (NYSE:BHE), which was worth $53.1 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $36.7 million worth of shares. Moreover, Renaissance Technologies, AQR Capital Management, and D E Shaw were also bullish on Benchmark Electronics, Inc. (NYSE:BHE), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Benchmark Electronics, Inc. (NYSE:BHE) has experienced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds that slashed their full holdings last quarter. Intriguingly, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $3.8 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund dropped about $1.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Benchmark Electronics, Inc. (NYSE:BHE) but similarly valued. We will take a look at Chico’s FAS, Inc. (NYSE:CHS), Compass Diversified Holdings LLC (NYSE:CODI), FARO Technologies, Inc. (NASDAQ:FARO), and GasLog Partners LP (NYSE:GLOP). All of these stocks’ market caps match BHE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHS 18 74700 -2
CODI 4 6160 -1
FARO 12 58107 1
GLOP 5 23310 1
Average 9.75 40569 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $138 million in BHE’s case. Chico’s FAS, Inc. (NYSE:CHS) is the most popular stock in this table. On the other hand Compass Diversified Holdings (NYSE:CODI) is the least popular one with only 4 bullish hedge fund positions. Benchmark Electronics, Inc. (NYSE:BHE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CHS might be a better candidate to consider a long position.

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

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