At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Boise Cascade Co (NYSE:BCC).
Boise Cascade Co (NYSE:BCC) was in 18 hedge funds’ portfolios at the end of March. BCC investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 24 hedge funds in our database with BCC holdings at the end of the previous quarter. Our calculations also showed that BCC isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the fresh hedge fund action surrounding Boise Cascade Co (NYSE:BCC).
What have hedge funds been doing with Boise Cascade Co (NYSE:BCC)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in BCC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Marshall Wace LLP was the largest shareholder of Boise Cascade Co (NYSE:BCC), with a stake worth $6.3 million reported as of the end of September. Trailing Marshall Wace LLP was AQR Capital Management, which amassed a stake valued at $5.9 million. Citadel Investment Group, GLG Partners, and Arrowstreet Capital 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 Algert Coldiron Investors allocated the biggest weight to Boise Cascade Co (NYSE:BCC), around 0.38% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to BCC.
Since Boise Cascade Co (NYSE:BCC) has witnessed falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds who sold off their positions entirely in the first quarter. Intriguingly, Richard Driehaus’s Driehaus Capital said goodbye to the largest stake of the 750 funds watched by Insider Monkey, comprising about $5.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund sold off about $0.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks similar to Boise Cascade Co (NYSE:BCC). These stocks are Southwestern Energy Company (NYSE:SWN), 3D Systems Corporation (NYSE:DDD), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), and Zuora, Inc. (NYSE:ZUO). This group of stocks’ market valuations match BCC’s market valuation.
|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 17 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $38 million in BCC’s case. Zuora, Inc. (NYSE:ZUO) is the most popular stock in this table. On the other hand Nova Measuring Instruments Ltd. (NASDAQ:NVMI) is the least popular one with only 10 bullish hedge fund positions. Boise Cascade Co (NYSE:BCC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on BCC as the stock returned 51.2% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.