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Were Hedge Funds Right About Boise Cascade Co (BCC)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Boise Cascade Co (NYSE:BCC) based on that data and determine whether they were really smart about the stock.

Is Boise Cascade Co (NYSE:BCC) a safe stock to buy now? Hedge funds were in a bearish mood. The number of bullish hedge fund bets went down by 6 in recent months. 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). BCC was in 18 hedge funds’ portfolios at the end of March. There were 24 hedge funds in our database with BCC holdings at the end of the previous quarter.

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.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let’s check out the recent hedge fund action regarding Boise Cascade Co (NYSE:BCC).

What does smart money think about Boise Cascade Co (NYSE:BCC)?

Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BCC over the last 18 quarters. So, let’s review 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, dishing out 0.06 percent of its 13F equity portfolio to BCC.

Because Boise Cascade Co (NYSE:BCC) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedgies that decided to sell off their full holdings in the first quarter. It’s worth mentioning that Richard Driehaus’s Driehaus Capital dropped the largest stake of the 750 funds watched by Insider Monkey, worth close to $5.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds in the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Boise Cascade Co (NYSE:BCC) but similarly valued. These stocks are Southwestern Energy Company (NYSE:SWN), 3D Systems Corporation (NYSE:DDD), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), and Zuora, Inc. (NYSE:ZUO). All of these stocks’ market caps are closest to BCC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWN 17 66169 2
DDD 18 63617 -1
NVMI 10 157943 0
ZUO 23 102623 -3
Average 17 97588 -0.5

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 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on BCC as the stock returned 101.5% since Q1 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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