Is Bluegreen Vacations Corporation (BXG) Going to Burn These Hedge Funds?
Abigail Fisher
6 min read
In this article we will check out the progression of hedge fund sentiment towards Bluegreen Vacations Corporation (NYSE:BXG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Bluegreen Vacations Corporation (NYSE:BXG) the right pick for your portfolio? Prominent investors are becoming less hopeful. The number of long hedge fund bets were cut by 1 in recent months. Our calculations also showed that BXG 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).
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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a peek at the new hedge fund action encompassing Bluegreen Vacations Corporation (NYSE:BXG).
What does smart money think about Bluegreen Vacations Corporation (NYSE:BXG)?
At Q1's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the fourth quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in BXG a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Bluegreen Vacations Corporation (NYSE:BXG) was held by Ancora Advisors, which reported holding $0.7 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $0.5 million position. Other investors bullish on the company included Arrowstreet Capital, Marshall Wace LLP, and Zebra Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Bluegreen Vacations Corporation (NYSE:BXG), around 0.27% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to BXG.
Since Bluegreen Vacations Corporation (NYSE:BXG) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain "tier" of hedgies who were dropping their entire stakes heading into Q4. Interestingly, Andrew Weiss's Weiss Asset Management dropped the largest stake of all the hedgies tracked by Insider Monkey, valued at about $19.5 million in stock, and Renaissance Technologies was right behind this move, as the fund dropped about $0.2 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Bluegreen Vacations Corporation (NYSE:BXG) but similarly valued. These stocks are QCR Holdings, Inc. (NASDAQ:QCRH), Yintech Investment Holdings Limited (NASDAQ:YIN), Prothena Corporation plc (NASDAQ:PRTA), and Midland States Bancorp, Inc. (NASDAQ:MSBI). This group of stocks' market valuations are similar to BXG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QCRH,8,35271,-1 YIN,1,562,0 PRTA,20,214962,-3 MSBI,8,5655,-1 Average,9.25,64113,-1.25 [/table]
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $2 million in BXG's case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Yintech Investment Holdings Limited (NASDAQ:YIN) is the least popular one with only 1 bullish hedge fund positions. Bluegreen Vacations Corporation (NYSE:BXG) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately BXG wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BXG investors were disappointed as the stock returned -4.2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
