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 third 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 5 years and analyze what the smart money thinks of BellRing Brands, Inc. (NYSE:BRBR) based on that data.
BellRing Brands, Inc. (NYSE:BRBR) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. BRBR shareholders have witnessed a decrease in hedge fund sentiment recently. There were 16 hedge funds in our database with BRBR holdings at the end of June. Our calculations also showed that BRBR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
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 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 S&P 500 ETFs by 66 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 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s view the key hedge fund action encompassing BellRing Brands, Inc. (NYSE:BRBR).
Do Hedge Funds Think BRBR Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in BRBR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Route One Investment Company, managed by William Duhamel, holds the number one position in BellRing Brands, Inc. (NYSE:BRBR). Route One Investment Company has a $107.1 million position in the stock, comprising 2.8% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $6.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Michael Rockefeller and KarláKroeker’s Woodline Partners, Israel Englander’s Millennium Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Route One Investment Company allocated the biggest weight to BellRing Brands, Inc. (NYSE:BRBR), around 2.81% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.12 percent of its 13F equity portfolio to BRBR.
Because BellRing Brands, Inc. (NYSE:BRBR) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds that decided to sell off their full holdings last quarter. It’s worth mentioning that Chuck Royce’s Royce & Associates sold off the biggest stake of the 750 funds tracked by Insider Monkey, comprising close to $7.7 million in stock, and Roberto Mignone’s Bridger Management was right behind this move, as the fund dumped about $2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BellRing Brands, Inc. (NYSE:BRBR) but similarly valued. We will take a look at Dillard’s, Inc. (NYSE:DDS), Green Brick Partners Inc (NASDAQ:GRBK), United Natural Foods, Inc. (NASDAQ:UNFI), Boot Barn Holdings Inc (NYSE:BOOT), Embraer SA (NYSE:ERJ), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), and Alexander & Baldwin Inc (NYSE:ALEX). This group of stocks’ market valuations are similar to BRBR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $124 million in BRBR’s case. United Natural Foods, Inc. (NASDAQ:UNFI) is the most popular stock in this table. On the other hand Embraer SA (NYSE:ERJ) is the least popular one with only 10 bullish hedge fund positions. BellRing Brands, Inc. (NYSE:BRBR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BRBR is 25.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BRBR as the stock returned 16.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.