The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Barings BDC, Inc. (NYSE:BBDC)?
Barings BDC, Inc. (NYSE:BBDC) investors should be aware of a decrease in hedge fund sentiment recently. Our calculations also showed that BBDC 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.
If you'd ask most traders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation at the moment, Our experts choose to focus on the elite of this group, about 850 funds. These hedge fund managers command the lion's share of the hedge fund industry's total asset base, and by watching their highest performing picks, Insider Monkey has come up with a number of investment strategies that have historically outperformed the broader indices. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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 stocks recommended/scorned by legendary Bill Miller. 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. Now let's analyze the recent hedge fund action regarding Barings BDC, Inc. (NYSE:BBDC).
What does smart money think about Barings BDC, Inc. (NYSE:BBDC)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in BBDC a year ago. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Clough Capital Partners, managed by Charles Clough, holds the most valuable position in Barings BDC, Inc. (NYSE:BBDC). Clough Capital Partners has a $7.3 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $3.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Robert B. Gillam's McKinley Capital Management, Phillip Goldstein, Andrew Dakos and Steven Samuels's Bulldog Investors and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Bulldog Investors allocated the biggest weight to Barings BDC, Inc. (NYSE:BBDC), around 0.78% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, dishing out 0.72 percent of its 13F equity portfolio to BBDC.
Judging by the fact that Barings BDC, Inc. (NYSE:BBDC) has faced declining sentiment from the smart money, it's safe to say that there was a specific group of fund managers that elected to cut their full holdings by the end of the first quarter. It's worth mentioning that Andrew Weiss's Weiss Asset Management sold off the largest position of all the hedgies monitored by Insider Monkey, comprising about $6.5 million in stock. Chuck Royce's fund, Royce & Associates, also said goodbye to its stock, about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks similar to Barings BDC, Inc. (NYSE:BBDC). These stocks are Peoples Utah Bancorp (NASDAQ:PUB), BioDelivery Sciences International, Inc. (NASDAQ:BDSI), Extreme Networks, Inc (NASDAQ:EXTR), and Global Indemnity Limited (NASDAQ:GBLI). This group of stocks' market values are similar to BBDC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PUB,7,12970,1 BDSI,27,102794,2 EXTR,16,48943,-1 GBLI,4,25028,-2 Average,13.5,47434,0 [/table]
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $17 million in BBDC's case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand Global Indemnity Limited (NASDAQ:GBLI) is the least popular one with only 4 bullish hedge fund positions. Barings BDC, Inc. (NYSE:BBDC) 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 BBDC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BBDC investors were disappointed as the stock returned 8.6% 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.
