Hedge Funds Have Never Been This Bullish On Berry Petroleum Corporation (BRY)

Asma UL Husna

Mon, Oct 28, 2019, 6:18 PM

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Berry Petroleum Corporation (NASDAQ:BRY) in this article.

Berry Petroleum Corporation (NASDAQ:BRY) was in 18 hedge funds' portfolios at the end of June. BRY shareholders have witnessed an increase in support from the world's most elite money managers recently. There were 16 hedge funds in our database with BRY holdings at the end of the previous quarter. Our calculations also showed that BRY isn't among the 30 most popular stocks among hedge funds (see the video below).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are a lot of formulas shareholders have at their disposal to grade publicly traded companies. Two of the best formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top investment managers can trounce the market by a very impressive amount (see the details here).

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the key hedge fund action surrounding Berry Petroleum Corporation (NASDAQ:BRY).

How have hedgies been trading Berry Petroleum Corporation (NASDAQ:BRY)?

At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in BRY a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Oaktree Capital Management held the most valuable stake in Berry Petroleum Corporation (NASDAQ:BRY), which was worth $136.7 million at the end of the second quarter. On the second spot was Venor Capital Management which amassed $21.8 million worth of shares. Moreover, Millennium Management, Deep Basin Capital, and Soros Fund Management were also bullish on Berry Petroleum Corporation (NASDAQ:BRY), allocating a large percentage of their portfolios to this stock.

As one would reasonably expect, key money managers have been driving this bullishness. Deep Basin Capital, managed by Matt Smith, initiated the largest position in Berry Petroleum Corporation (NASDAQ:BRY). Deep Basin Capital had $7.8 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.5 million position during the quarter. The other funds with brand new BRY positions are David Harding's Winton Capital Management, Joel Greenblatt's Gotham Asset Management, and D. E. Shaw's D E Shaw.

Let's now review hedge fund activity in other stocks similar to Berry Petroleum Corporation (NASDAQ:BRY). We will take a look at istar Inc (NYSE:STAR), Century Communities, Inc (NYSE:CCS), Malibu Boats Inc (NASDAQ:MBUU), and Franklin Street Properties Corp. (NYSE:FSP). This group of stocks' market values resemble BRY's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STAR,5,66936,-4 CCS,17,137530,1 MBUU,17,103028,-1 FSP,6,33455,-2 Average,11.25,85237,-1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $193 million in BRY's case. Century Communities, Inc (NYSE:CCS) is the most popular stock in this table. On the other hand istar Inc (NYSE:STAR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Berry Petroleum Corporation (NASDAQ:BRY) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BRY wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BRY were disappointed as the stock returned -10.6% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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

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