Were Hedge Funds Right About Barnes Group Inc. (B)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Barnes Group Inc. (NYSE:B).

Is Barnes Group Inc. (NYSE:B) worth your attention right now? Hedge funds were becoming more confident. The number of bullish hedge fund positions moved up by 6 lately. Barnes Group Inc. (NYSE:B) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. Our calculations also showed that B isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most shareholders, hedge funds are seen as worthless, old financial tools of years past. While there are more than 8000 funds trading today, We look at the aristocrats of this club, approximately 850 funds. These money managers orchestrate the lion’s share of all hedge funds’ total capital, and by tracking their matchless picks, Insider Monkey has uncovered several investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind let’s take a look at the recent hedge fund action encompassing Barnes Group Inc. (NYSE:B).

Do Hedge Funds Think B Is A Good Stock To Buy Now?

At the end of March, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards B over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is B A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in Barnes Group Inc. (NYSE:B). Arrowstreet Capital has a $12.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, managed by Ken Fisher, which holds a $11.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions consist of D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Paul Tudor Jones’s Tudor Investment Corp. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Barnes Group Inc. (NYSE:B), around 0.05% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to B.

Consequently, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in Barnes Group Inc. (NYSE:B). Citadel Investment Group had $2.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new B investors: Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Greg Eisner’s Engineers Gate Manager.

Let’s now take a look at hedge fund activity in other stocks similar to Barnes Group Inc. (NYSE:B). We will take a look at Jack in the Box Inc. (NASDAQ:JACK), Accolade, Inc. (NASDAQ:ACCD), Xencor Inc (NASDAQ:XNCR), Medifast, Inc. (NYSE:MED), Ameresco Inc (NYSE:AMRC), Rush Enterprises, Inc. (NASDAQ:RUSHB), and Telephone & Data Systems, Inc. (NYSE:TDS). This group of stocks’ market valuations are similar to B’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JACK 30 302872 -4
ACCD 19 471681 -2
XNCR 16 269589 0
MED 22 287110 4
AMRC 16 77274 1
RUSHB 4 54912 1
TDS 20 253689 -4
Average 18.1 245304 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $43 million in B’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 4 bullish hedge fund positions. Barnes Group Inc. (NYSE:B) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for B is 65.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately B wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); B investors were disappointed as the stock returned 0.4% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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