Should You Buy B/E Aerospace Inc (BEAV)?

At Insider Monkey, we track over 700 of the most successful hedge funds in the world and analyze their top stock picks so as to gain insight into their collective buying habits. Despite redemptions totaling about $67 billion this year, hedge funds’ assets under management have risen to $3.24 trillion thanks to gains of 5.44% this year. While hedge funds continue to underperform the market, we have found that they excel at picking stocks on the long side of their portfolios, while generally not faring as well with their other investments, which drags down their overall returns. For example, their top-30 mid-cap stock picks delivered 18% returns during the 12-month period ended November 21, 2016, while the S&P 500 Index posted gains of less than half that (7.6%). This is why we share the top picks and trends among the group of hedge funds that we follow with readers, and why in this article, we’ll see how they’ve recently traded B/E Aerospace Inc (NASDAQ:BEAV) .

B/E Aerospace Inc (NASDAQ:BEAV) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 33 hedge funds’ portfolios at the end of September. At the end of this article we will also compare BEAV to other stocks including Kinross Gold Corporation (USA) (NYSE:KGC), Murphy Oil Corporation (NYSE:MUR), and Avnet, Inc. (NYSE:AVT) to get a better sense of its popularity.

Follow B/e Aerospace Inc (NASDAQ:BEAV)

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading B/E Aerospace Inc (NASDAQ:BEAV)?

At Q3’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in BEAV over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Highfields Capital Management, led by Jonathon Jacobson, holds the largest position in B/E Aerospace Inc (NASDAQ:BEAV). Highfields Capital Management has a $245.8 million position in the stock, comprising 2.3% of its 13F portfolio. The second largest stake is held by Iridian Asset Management, led by David Cohen and Harold Levy, holding a $101.9 million position. Some other professional money managers that are bullish consist of Richard Barrera’s Roystone Capital Partners, Keith Meister’s Corvex Capital and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that B/E Aerospace Inc (NASDAQ:BEAV) has witnessed falling interest from the smart money, we can see that there is a sect of hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Thomas Steyer’s Farallon Capital said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $62.9 million in stock, and John Paulson’s Paulson & Co was right behind this move, as the fund sold off about $45.3 million worth of shares.

Let’s check out hedge fund activity in other stocks similar to B/E Aerospace Inc (NASDAQ:BEAV). We will take a look at Kinross Gold Corporation (USA) (NYSE:KGC), Murphy Oil Corporation (NYSE:MUR), Avnet, Inc. (NYSE:AVT), and Reliance Steel & Aluminum (NYSE:RS). This group of stocks’ market values are closest to BEAV’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KGC 26 633503 -5
MUR 16 391635 1
AVT 26 742965 4
RS 22 439539 -5

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $552 million. That figure was $993 million in BEAV’s case. Kinross Gold Corporation (USA) (NYSE:KGC) is the most popular stock in this table. On the other hand Murphy Oil Corporation (NYSE:MUR) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks B/E Aerospace Inc (NASDAQ:BEAV) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None