The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Brookfield Infrastructure Partners L.P. (NYSE:BIP) based on those filings.
Is BIP a good stock to buy now? Brookfield Infrastructure Partners L.P. (NYSE:BIP) was in 13 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. BIP has experienced an increase in hedge fund interest of late. There were 12 hedge funds in our database with BIP positions at the end of the second quarter. Our calculations also showed that BIP 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
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 we're going to review the new hedge fund action regarding Brookfield Infrastructure Partners L.P. (NYSE:BIP).
Do Hedge Funds Think BIP Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in BIP a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in Brookfield Infrastructure Partners L.P. (NYSE:BIP), which was worth $24.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $6 million worth of shares. Citadel Investment Group, Lucas Capital Management, and Horizon Asset Management 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 Lucas Capital Management allocated the biggest weight to Brookfield Infrastructure Partners L.P. (NYSE:BIP), around 3.15% of its 13F portfolio. Brasada Capital Management is also relatively very bullish on the stock, dishing out 0.46 percent of its 13F equity portfolio to BIP.
Consequently, key money managers have jumped into Brookfield Infrastructure Partners L.P. (NYSE:BIP) headfirst. GLG Partners, managed by Noam Gottesman, initiated the biggest position in Brookfield Infrastructure Partners L.P. (NYSE:BIP). GLG Partners had $1.6 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0.9 million investment in the stock during the quarter. The only other fund with a new position in the stock is Dmitry Balyasny's Balyasny Asset Management.
Let's now review hedge fund activity in other stocks similar to Brookfield Infrastructure Partners L.P. (NYSE:BIP). These stocks are Tiffany & Co. (NYSE:TIF), Wix.Com Ltd (NASDAQ:WIX), PerkinElmer, Inc. (NYSE:PKI), Tyler Technologies, Inc. (NYSE:TYL), Nomura Holdings, Inc. (NYSE:NMR), Royal Caribbean Group (NYSE:RCL), and Sun Communities Inc (NYSE:SUI). This group of stocks' market values are closest to BIP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TIF,61,2294401,-3 WIX,36,1104994,9 PKI,36,1750632,6 TYL,31,520210,-5 NMR,6,18282,1 RCL,30,418133,-1 SUI,31,350701,1 Average,33,922479,1.1 [/table]
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $922 million. That figure was $51 million in BIP's case. Tiffany & Co. (NYSE:TIF) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 6 bullish hedge fund positions. Brookfield Infrastructure Partners L.P. (NYSE:BIP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BIP is 40.2. 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. 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 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 surpassed the market again by 16.2 percentage points. Unfortunately BIP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BIP investors were disappointed as the stock returned 9.5% since the end of September (through 12/8) 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
