Hedge Funds Are Nibbling On Brown & Brown, Inc. (BRO)

·6 min read

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 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards Brown & Brown, Inc. (NYSE:BRO).

Brown & Brown, Inc. (NYSE:BRO) shareholders have witnessed an increase in enthusiasm from smart money of late. Brown & Brown, Inc. (NYSE:BRO) was in 26 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 31. There were 25 hedge funds in our database with BRO positions at the end of the first quarter. Our calculations also showed that BRO isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to view the new hedge fund action surrounding Brown & Brown, Inc. (NYSE:BRO).

Do Hedge Funds Think BRO Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BRO over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the number one position in Brown & Brown, Inc. (NYSE:BRO). Select Equity Group has a $870.8 million position in the stock, comprising 3% of its 13F portfolio. On Select Equity Group's heels is Dmitry Balyasny of Balyasny Asset Management, with a $64.3 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Running Oak Capital allocated the biggest weight to Brown & Brown, Inc. (NYSE:BRO), around 3.1% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, setting aside 2.98 percent of its 13F equity portfolio to BRO.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), assembled the most valuable position in Brown & Brown, Inc. (NYSE:BRO). Schonfeld Strategic Advisors had $31.8 million invested in the company at the end of the quarter. Daniel Johnson's Gillson Capital also initiated a $11.2 million position during the quarter. The following funds were also among the new BRO investors: Steve Cohen's Point72 Asset Management, Benjamin A. Smith's Laurion Capital Management, and Karim Abbadi and Edward McBride's Centiva Capital.

Let's now review hedge fund activity in other stocks similar to Brown & Brown, Inc. (NYSE:BRO). These stocks are Masco Corporation (NYSE:MAS), LKQ Corporation (NASDAQ:LKQ), Cognex Corporation (NASDAQ:CGNX), Howmet Aerospace Inc. (NYSE:HWM), Molina Healthcare, Inc. (NYSE:MOH), Agnico Eagle Mines Limited (NYSE:AEM), and GDS Holdings Limited (NASDAQ:GDS). This group of stocks' market values resemble BRO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAS,35,480276,2 LKQ,35,1708946,-1 CGNX,35,536677,1 HWM,47,3892856,-4 MOH,34,1618744,3 AEM,29,235678,1 GDS,38,1648522,-2 Average,36.1,1445957,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1446 million. That figure was $1213 million in BRO's case. Howmet Aerospace Inc. (NYSE:HWM) is the most popular stock in this table. On the other hand Agnico Eagle Mines Limited (NYSE:AEM) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Brown & Brown, Inc. (NYSE:BRO) is even less popular than AEM. Our overall hedge fund sentiment score for BRO is 31.2. 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. Hedge funds clearly dropped the ball on BRO as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on BRO as the stock returned 21.2% since Q2 (through October 15th) and outperformed the market by an even larger margin.

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

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