After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Brighthouse Financial, Inc. (NASDAQ:BHF).
Is BHF stock a buy? Brighthouse Financial, Inc. (NASDAQ:BHF) shareholders have witnessed an increase in hedge fund interest recently. Brighthouse Financial, Inc. (NASDAQ:BHF) was in 33 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 43. There were 26 hedge funds in our database with BHF positions at the end of the third quarter. Our calculations also showed that BHF isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.
David Einhorn of Greenlight Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 analyze the latest hedge fund action regarding Brighthouse Financial, Inc. (NASDAQ:BHF).
Do Hedge Funds Think BHF Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in BHF over the last 22 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Brighthouse Financial, Inc. (NASDAQ:BHF) was held by Greenlight Capital, which reported holding $131.8 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $64.2 million position. Other investors bullish on the company included EJF Capital, Citadel Investment Group, and Diamond Hill Capital. In terms of the portfolio weights assigned to each position Greenlight Capital allocated the biggest weight to Brighthouse Financial, Inc. (NASDAQ:BHF), around 7.93% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, designating 5.13 percent of its 13F equity portfolio to BHF.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Prelude Capital (previously Springbok Capital), managed by Gavin Saitowitz and Cisco J. del Valle, established the most valuable position in Brighthouse Financial, Inc. (NASDAQ:BHF). Prelude Capital (previously Springbok Capital) had $20 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also made a $11.4 million investment in the stock during the quarter. The following funds were also among the new BHF investors: Sander Gerber's Hudson Bay Capital Management, Steve Cohen's Point72 Asset Management, and Allon Hellmann's Full18 Capital.
Let's now take a look at hedge fund activity in other stocks similar to Brighthouse Financial, Inc. (NASDAQ:BHF). These stocks are Ambarella Inc (NASDAQ:AMBA), ALLETE Inc (NYSE:ALE), LivaNova PLC (NASDAQ:LIVN), Home Bancshares Inc (NASDAQ:HOMB), Univar Solutions Inc (NYSE:UNVR), Pactiv Evergreen Inc. (NASDAQ:PTVE), and BankUnited Inc (NYSE:BKU). All of these stocks' market caps resemble BHF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMBA,36,377357,2 ALE,11,90048,-9 LIVN,30,547350,4 HOMB,12,37950,-2 UNVR,31,712512,1 PTVE,7,118932,-8 BKU,11,121421,-3 Average,19.7,286510,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $464 million in BHF's case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand Pactiv Evergreen Inc. (NASDAQ:PTVE) is the least popular one with only 7 bullish hedge fund positions. Brighthouse Financial, Inc. (NASDAQ:BHF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHF is 77.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on BHF as the stock returned 25.5% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow Brighthouse Financial Inc. (NASDAQ:BHF)
Disclosure: None. This article was originally published at Insider Monkey.