A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Barrett Business Services, Inc. (NASDAQ:BBSI).
Is BBSI a good stock to buy now? Barrett Business Services, Inc. (NASDAQ:BBSI) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that BBSI 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Puma Biotechnology Inc (NASDAQ:PBYI), Carriage Services, Inc. (NYSE:CSV), and Voyager Therapeutics, Inc. (NASDAQ:VYGR) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Peter Algert of Algert Global
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. With all of this in mind we're going to go over the fresh hedge fund action regarding Barrett Business Services, Inc. (NASDAQ:BBSI).
Do Hedge Funds Think BBSI Is A Good Stock To Buy Now?
At third quarter's end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BBSI over the last 21 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Barrett Business Services, Inc. (NASDAQ:BBSI), with a stake worth $18.5 million reported as of the end of September. Trailing Renaissance Technologies was Private Capital Management, which amassed a stake valued at $11.4 million. Arrowstreet Capital, Rutabaga Capital Management, and Royce & Associates 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 Private Capital Management allocated the biggest weight to Barrett Business Services, Inc. (NASDAQ:BBSI), around 2.61% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, dishing out 2.4 percent of its 13F equity portfolio to BBSI.
Judging by the fact that Barrett Business Services, Inc. (NASDAQ:BBSI) has experienced a decline in interest from hedge fund managers, logic holds that there was a specific group of hedge funds who were dropping their positions entirely heading into Q4. At the top of the heap, Ken Griffin's Citadel Investment Group sold off the biggest stake of the 750 funds watched by Insider Monkey, comprising about $1.1 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also dumped its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Barrett Business Services, Inc. (NASDAQ:BBSI). These stocks are Puma Biotechnology Inc (NASDAQ:PBYI), Carriage Services, Inc. (NYSE:CSV), Voyager Therapeutics, Inc. (NASDAQ:VYGR), Jernigan Capital Inc (NYSE:JCAP), Prothena Corporation plc (NASDAQ:PRTA), Heritage Commerce Corp. (NASDAQ:HTBK), and Donegal Group Inc (NASDAQ:DGICA). This group of stocks' market values match BBSI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBYI,17,125131,-1 CSV,11,39956,-1 VYGR,10,49897,-4 JCAP,9,27556,-3 PRTA,23,207482,-2 HTBK,12,16300,1 DGICA,7,11570,3 Average,12.7,68270,-1 [/table]
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $53 million in BBSI's case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Donegal Group Inc (NASDAQ:DGICA) is the least popular one with only 7 bullish hedge fund positions. Barrett Business Services, Inc. (NASDAQ:BBSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BBSI is 53.8. 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. Hedge funds were also right about betting on BBSI as the stock returned 36.9% since the end of Q3 (through 12/8) 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.
