Where Do Hedge Funds Stand On Beacon Roofing Supply, Inc. (BECN)?
Is Beacon Roofing Supply, Inc. (NASDAQ:BECN) a good place to invest some of your money now? We can gain valuable insights to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given vast resources and industry contacts to put their financial expertise to work. . The top picks of these companies have historically outperformed the market when we consider known risk factors, making them very valuable investment ideas.
Is Beacon Roofing Supply, Inc. (NASDAQ:BECN) are you going to take off soon? Money managers were pessimistic. The number of long hedge fund bets has shrunk by 2 in recent months. Beacon Roofing Supply, Inc. (NASDAQ:BECN) was in the portfolios of 21 hedge funds at the end of March. The highest ever point for this statistic is 40. Our calculations also showed that BECN is not among the 30 Most Popular Stocks Among Hedge Funds (click for Q1 ranking).
Why do we pay any attention to hedge fund sentiment at all? Our research found that as of March 2017, a select group of hedge fund investments outperformed the S&P 500 ETFs by 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should look out for.
Brad Farber of Atika Capital
At Insider Monkey, we scour multiple sources to discover the next great investment idea. For example, Chuck Schumer recently stated that legalization of marijuana will be a Senate priority. So we check out this under the radar stock who will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a return of 10x. While we recommend positions in only a small portion of the companies we analyze, we look at as many stocks as possible. We read letters from hedge fund investors and listen to stock prices at hedge fund conferences. You can subscribe to our free daily newsletter at our home page. With all this in mind, let’s take a look at the key hedge fund move that Beacon Roofing Supply, Inc. includes (NASDAQ:BECN).
Do hedge funds think BECN is a good stock to buy now?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey had long positions in this stock, a -9% change from the previous quarter. Below you can see the change in hedge fund sentiment relative to BECN over the past 23 quarters. So let’s take a look at which hedge funds were among the top owners of the stock and which hedge funds were making big strides.
According to publicly available data on hedge funds and institutional investors, collected by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management holds the number one position in Beacon Roofing Supply, Inc. (NASDAQ:BECN), valued at nearly $136.4 million, accounting for 2.3% of its total 13F portfolio. On the heels of Iridian Asset Management is Fisher Asset Management, managed by Ken Fisher, with a holding of $77.6 million; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors of similar optimism include Ken Griffin’s Citadel Investment Group, Lee Ainslie’s Maverick Capital and Charles Paquelet’s Skylands Capital. In terms of the portfolio weights assigned to each position, Soapstone Capital assigned the largest weight to Beacon Roofing Supply, Inc. (NASDAQ:BECN), approximately 7.56% of its 13F portfolio. Highside Global Management is also relatively optimistic about the stock, donating 7.36 percent of its 13F stock portfolio to BECN.
Judging by the fact that Beacon Roofing Supply, Inc. (NASDAQ:BECN) has faced dwindling interest from hedge fund managers, it’s easy to see a cult of money managers who have chosen to reduce their entire stakes in the past quarter. On top of the heap, Daniel Lascano’s Lomas Capital Management cut the largest position of all the hedgies tracked by Insider Monkey, totaling nearly $26.5 million in stock, and Israel Englander’s Millennium Management was directly behind this move as the fund sold approximately $13.3 million. These trades are interesting as total hedge fund interest fell by 2 funds in the past quarter.
Now let’s look at hedge fund activities in other stocks similar to Beacon Roofing Supply, Inc. (NASDAQ:BECN). We’ll take a look at Cannae Holdings, Inc. (NYSE:CNNE), BRF SA (NYSE:BRFS), Cushman & Wakefield plc (NYSE:CWK), Spectrum Brands Holdings, Inc. (NYSE:SPB), Kirby Corporation (NYSE:KEX), BanColombia SA (NYSE:CIB), and Bank of Hawaii Corporation (NYSE:BOH). The market valuations of this group of shares resemble the market valuation of BECN.
[table] Ticker, number of HFs with positions, total value of HF positions (x1000), change in HF position CNNE,36,672726.2 BRFS,8,47746,-3 CWK,19,157185.4 SPB,37,618156.2 KEX ,23.632227.1 CIB,3.68988.-1 BOH,15.45660.-2 Average,20.1.320384.0.4 [/table]
View table here if you are experiencing formatting issues.
As you can see, these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $320 million. That figure was $411 million in BECN’s case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular share in this table. On the other hand, BanColombia SA (NYSE:CIB) is the least popular with only 3 bullish hedge fund positions. Beacon Roofing Supply, Inc. (NASDAQ:BECN) is not the most popular stock in this group, but interest in hedge funds is still above average. Our overall hedge fund sentiment score for BECN is 45.2. Stocks with a higher number of hedge fund positions compared to other stocks and relative to their historical range receive a higher sentiment score. This is a slightly positive sign, but we prefer to spend our time researching stocks that hedge funds are piling up on. Our calculations showed that top 5 most popular stocks of hedge funds returned 95.8% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16, beating the market again by 7.7 percentage points. Unfortunately, BECN was not nearly as popular as these 5 stocks and hedge funds betting on BECN were disappointed as the stock has rebounded -0.7% since late March (through 16-7) and underperformed the market. If you’re interested in investing in large-cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds, as many of these stocks have outperformed the market since 2019.
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Disclosure: none. This article was originally published on: Insider Monkey.