BlackRock, Inc. (NYSE:BLK) reported Wednesday an adjusted net income of $838 million, or $4.96 per share for its second quarter, surpassing EPS expectations of $4.81. The beat comes on top of revenue growth of 5% year-over-year to $2.91 billion for the just-ended quarter, also beating estimates of $2.86 billion. While revenue, as well as operating income which grew 10% year-over-year to $1.25 billion, were the highlights of BlackRock, Inc.’s second quarter, expenses increased for the investment management firm. Total expense was reported to be $1.67 billion, up from $1.66 billion in the same quarter last year, while the company also reported a total non-operating expense of $41 million. Investment advisory, administration fees, and securities lending revenue increased to $2.53 billion from $2.43 billion in the year-ago quarter. Investment advisory performance fees also went up to $136 million from $115 million.
BlackRock, Inc. (NYSE:BLK) said that for the just-ended quarter, long-term net inflows were $10.8 billion in the Retail segment, comprised of $7.4 billion in domestic net inflows and $3.4 billion in international inflows. Fixed net income inflows were $9.8 billion. Furthermore, long-term net iShares inflows were $10.9 billion, the firm reported, which included $8.8 billion equity net inflows. BlackRock said demand for international developed markets exposures boosted iShares inflows. $4.4 billion in multi-asset net inflows increased long-term net inflows from institutional active clients, which was reported to have increased to $2.5 billion.
It appears hedge funds followed by Insider Monkey did not see BlackRock, Inc.’s second quarter beat coming. Total holdings of hedge funds which had long stakes in BlackRock, Inc. in the first quarter dropped 10.50% quarter-over-quarter to $456.83 million. This is despite the stock growing by 2.32% in the first three months of the year. It appears the smart money predicted the stock’s performance of late however, as the stock declined by 5.43% in the April to June quarter. Heading into the second quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. This means that those who were long in the stock reduced their overall investment in the firm, and appear right to have done so, even following the beat today, which has sent shares up by less than 1% and still down for the third quarter.
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Insider Monkey also follows insider transactions in companies such as BlackRock, Inc. to see whether executives inside these companies are confident in these firms’ shares. While there have been no purchases of shares by insiders this year, there have been several sales. The most recent sale was by Senior Managing Director Jeff Smith, who sold 350 shares on May 8. Chief Operating Officer Robert Goldstein sold 3,142 shares on February 9.
Considering all of this, we’re going to view the latest key hedge fund activity surrounding BlackRock, Inc.
What have hedge funds been doing with BlackRock, Inc. (NYSE:BLK)?
Phill Gross and Robert Atchinson‘s Adage Capital Management had the most valuable position in BlackRock, Inc. (NYSE:BLK), worth close to $71.1 million and made up of 194,380 shares at the end of March. The second-most bullish hedge fund manager was Partner Fund Management, led by Christopher Medlock James, which held a $60.7 million position in 165,831 shares. Remaining peers that were bullish include Tom Gayner’s Markel Gayner Asset Management, Jim Simons’ Renaissance Technologies, and David E. Shaw’s D.E. Shaw & Co., L.P.
As BlackRock, Inc. (NYSE:BLK) saw declining sentiment from the hedge fund industry, there were a few funds who sold off their entire stakes in the first quarter. Sharif Siddiqui‘s Alpenglow Capital sold off the biggest position of all the hedgies watched by Insider Monkey, comprising 12,200 shares worth about $4.36 million. Daniel S. Och’s fund, OZ Management, also sold off its 8,235 shares, about $2.95 million worth.
BlackRock does not appear to be a good stock to buy at the moment based on the bearish sentiment the world’s foremost money managers have shown BlackRock, Inc. (NYSE:BLK) of late.
Disclosure: None
