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Should You Avoid Bristow Group Inc (BRS)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Bristow Group Inc (NYSE:BRS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Bristow Group Inc (NYSE:BRS) was in 10 hedge funds’ portfolios at the end of September. BRS has experienced a decrease in enthusiasm from smart money in recent months. There were 11 hedge funds in our database with BRS holdings at the end of the previous quarter. Our calculations also showed that BRS isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Richard Pzena - Pzena Investment Management

Let’s take a peek at the key hedge fund action regarding Bristow Group Inc (NYSE:BRS).

How have hedgies been trading Bristow Group Inc (NYSE:BRS)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BRS over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

BRS_dec2018

More specifically, Ariel Investments was the largest shareholder of Bristow Group Inc (NYSE:BRS), with a stake worth $99.3 million reported as of the end of September. Trailing Ariel Investments was D E Shaw, which amassed a stake valued at $10.8 million. Renaissance Technologies, Millennium Management, and Pzena Investment Management were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Bristow Group Inc (NYSE:BRS) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedge funds who sold off their entire stakes heading into Q3. At the top of the heap, Richard Mashaal’s Rima Senvest Management dropped the largest investment of the 700 funds followed by Insider Monkey, totaling an estimated $30.8 million in stock. Richard Mashaal’s fund, Rima Senvest Management, also cut its stock, about $17.2 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds heading into Q3.

Let’s now take a look at hedge fund activity in other stocks similar to Bristow Group Inc (NYSE:BRS). These stocks are Perry Ellis International, Inc. (NASDAQ:PERY), NN, Inc. (NASDAQ:NNBR), Smart & Final Stores Inc (NYSE:SFS), and CVR Partners LP (NYSE:UAN). This group of stocks’ market valuations are closest to BRS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PERY 8 35015 -3
NNBR 14 75795 6
SFS 10 28338 -1
UAN 2 25692 0
Average 8.5 41210 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $128 million in BRS’s case. NN, Inc. (NASDAQ:NNBR) is the most popular stock in this table. On the other hand CVR Partners LP (NYSE:UAN) is the least popular one with only 2 bullish hedge fund positions. Bristow Group Inc (NYSE:BRS) 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 NNBR might be a better candidate to consider a long position.

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

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