Is BlackBerry Limited (NYSE:BB) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
BlackBerry Limited (NYSE:BB) shareholders have witnessed a decrease in hedge fund sentiment recently. BlackBerry Limited (NYSE:BB) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 31. There were 31 hedge funds in our database with BB holdings at the end of December. Our calculations also showed that BB isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Prem Watsa of Fairfax Financial Holdings
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. With all of this in mind let’s take a gander at the recent hedge fund action encompassing BlackBerry Limited (NYSE:BB).
Do Hedge Funds Think BB Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in BB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fairfax Financial Holdings held the most valuable stake in BlackBerry Limited (NYSE:BB), which was worth $392.5 million at the end of the fourth quarter. On the second spot was Kahn Brothers which amassed $22.5 million worth of shares. Citadel Investment Group, MFP Investors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fairfax Financial Holdings allocated the biggest weight to BlackBerry Limited (NYSE:BB), around 13.69% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, dishing out 3.48 percent of its 13F equity portfolio to BB.
Seeing as BlackBerry Limited (NYSE:BB) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers who were dropping their full holdings in the first quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management dropped the largest position of the 750 funds monitored by Insider Monkey, totaling close to $3.1 million in stock, and Renaissance Technologies was right behind this move, as the fund said goodbye to about $2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 7 funds in the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as BlackBerry Limited (NYSE:BB) but similarly valued. We will take a look at Synaptics Incorporated (NASDAQ:SYNA), Shake Shack Inc (NYSE:SHAK), Neogen Corporation (NASDAQ:NEOG), Valvoline Inc. (NYSE:VVV), The Hanover Insurance Group, Inc. (NYSE:THG), Sabre Corporation (NASDAQ:SABR), and TTEC Holdings, Inc. (NASDAQ:TTEC). This group of stocks’ market caps match BB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYNA | 25 | 533817 | -3 |
| SHAK | 23 | 560136 | -2 |
| NEOG | 10 | 29017 | -6 |
| VVV | 23 | 677540 | -4 |
| THG | 18 | 95544 | -2 |
| SABR | 40 | 1280794 | -6 |
| TTEC | 10 | 55504 | 0 |
| Average | 21.3 | 461765 | -3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $462 million. That figure was $500 million in BB’s case. Sabre Corporation (NASDAQ:SABR) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 10 bullish hedge fund positions. BlackBerry Limited (NYSE:BB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BB is 44.6. 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 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on BB as the stock returned 19.9% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
