Were Hedge Funds Right About BrightView Holdings (BV)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of BrightView Holdings, Inc. (NYSE:BV) based on that data.

BrightView Holdings, Inc. (NYSE:BV) was in 9 hedge funds’ portfolios at the end of the fourth quarter of 2019. BV has experienced a decrease in support from the world’s most elite money managers in recent months. There were 11 hedge funds in our database with BV holdings at the end of the previous quarter. Our calculations also showed that BV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

If you’d ask most investors, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation today, Our researchers choose to focus on the upper echelon of this club, approximately 850 funds. Most estimates calculate that this group of people manage the majority of the hedge fund industry’s total capital, and by paying attention to their matchless stock picks, Insider Monkey has brought to light a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .


Israel Englander of Millennium Management

We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the recent hedge fund action encompassing BrightView Holdings, Inc. (NYSE:BV).

What does smart money think about BrightView Holdings, Inc. (NYSE:BV)?

At the end of the fourth quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in BV over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in BrightView Holdings, Inc. (NYSE:BV) was held by MSDC Management, which reported holding $229.9 million worth of stock at the end of September. It was followed by Broad Bay Capital with a $21.8 million position. Other investors bullish on the company included Millennium Management, BlueMar Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position MSDC Management allocated the biggest weight to BrightView Holdings, Inc. (NYSE:BV), around 50.6% of its 13F portfolio. Broad Bay Capital is also relatively very bullish on the stock, earmarking 5.19 percent of its 13F equity portfolio to BV.

Since BrightView Holdings, Inc. (NYSE:BV) has faced declining sentiment from the smart money, logic holds that there was a specific group of funds that slashed their positions entirely heading into Q4. It’s worth mentioning that Amy Minella’s Cardinal Capital said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, comprising close to $8.2 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dropped about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BrightView Holdings, Inc. (NYSE:BV) but similarly valued. These stocks are Tellurian Inc. (NASDAQ:TELL), Kaiser Aluminum Corp. (NASDAQ:KALU), Easterly Government Properties Inc (NYSE:DEA), and MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI). This group of stocks’ market caps match BV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TELL 11 37746 -4
KALU 17 110516 -4
DEA 10 105516 -1
MTSI 18 223816 3
Average 14 119399 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $274 million in BV’s case. MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is the most popular stock in this table. On the other hand Easterly Government Properties Inc (NYSE:DEA) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks BrightView Holdings, Inc. (NYSE:BV) is even less popular than DEA. Hedge funds dodged a bullet by taking a bearish stance towards BV. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately BV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BV investors were disappointed as the stock returned -44.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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