Is BrightSphere Investment Group Inc. (BSIG) A Smart Long-Term Buy?

·4 min read

Third Avenue Management, an investment management firm, published its “Small-Cap Value Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 18.51% was recorded by the fund for the Q1 of 2021, below the Fund’s most relevant benchmark, Russell 2000 Value Index, that rose to 21.17% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Third Avenue Management, in its Small-Cap Value Fund Q1 2021 investor letter, mentioned BrightSphere Investment Group Inc. (NYSE: BSIG), and shared their insights on the company. BrightSphere Investment Group Inc. is a Boston, Massachusetts-based asset management company that currently has a $1.7 billion market capitalization. Since the beginning of the year, BSIG delivered a 16.49% return, extending its 12-month gains to 197.48%. As of May 11, 2021, the stock closed at $22.61 per share.

Here is what Third Avenue Management has to say about BrightSphere Investment Group Inc. in its Q1 2021 investor letter:

"During the quarter we added a new investment in BrightSphere Investment Group. BrightSphere is an active asset management holding company that came onto our radar earlier this year. While the company has changed names over time and is not as well-known as some other multi-boutique asset managers, BrightSphere has a long history in the industry. Today, the company owns a handful of asset managers spanning quantitative, alternative, and traditional equity strategies. We were attracted to BrightSphere for a number of reasons. First, the asset managers BrightSphere owns are generally differentiated with strong reputations, track records, and growth prospects based on our due diligence. Second, the company enjoys a strong financial position with attractive free cash flow generation. Finally, BrightSphere’s shares trade at a substantial discount to our estimate of the private market values for its businesses. This last aspect of our thesis was validated within weeks of our investment, when the company announced the sale of one of its largest managers Landmark Partners. Landmark is one of the pioneers of private equity secondaries investing, and at the end of March the global alternative investment manager Ares announced its intention to acquire Landmark for upwards of a billion dollars. We believe the remaining assets that BrightSphere owns could represent attractive resource conversion candidates too at some point. Meanwhile, we’re confident that BrightSphere’s board and management are committed to maximizing the company’s value and thoughtfully returning capital to shareholders through buybacks and dividends."

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Our calculations show that BrightSphere Investment Group Inc. (NYSE: BSIG) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, BrightSphere Investment Group Inc. was in 26 hedge fund portfolios, compared to 25 funds in the third quarter. BSIG delivered a 15.87% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.

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