Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards BlackRock, Inc. (NYSE:BLK) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is BlackRock, Inc. (NYSE:BLK) a buy right now? The best stock pickers were cutting their exposure. The number of bullish hedge fund positions went down by 3 in recent months. BlackRock, Inc. (NYSE:BLK) was in 44 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 53. Our calculations also showed that BLK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Andrew Sandler of Sandler Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a peek at the latest hedge fund action encompassing BlackRock, Inc. (NYSE:BLK).
Do Hedge Funds Think BLK Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the second quarter of 2021. By comparison, 39 hedge funds held shares or bullish call options in BLK a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in BlackRock, Inc. (NYSE:BLK), which was worth $264.8 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $230.9 million worth of shares. Markel Gayner Asset Management, Adage Capital Management, and Fisher Asset Management 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 Ivy Lane Capital allocated the biggest weight to BlackRock, Inc. (NYSE:BLK), around 12.59% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, earmarking 7.63 percent of its 13F equity portfolio to BLK.
Judging by the fact that BlackRock, Inc. (NYSE:BLK) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers that slashed their entire stakes heading into Q4. Interestingly, James Parsons’s Junto Capital Management cut the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $121.1 million in stock. Andrew Sandler’s fund, Sandler Capital Management, also dropped its stock, about $6.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BlackRock, Inc. (NYSE:BLK) but similarly valued. These stocks are Goldman Sachs Group, Inc. (NYSE:GS), TotalEnergies SE (NYSE:TTE), Advanced Micro Devices, Inc. (NASDAQ:AMD), International Business Machines Corp. (NYSE:IBM), ServiceNow Inc (NYSE:NOW), Sanofi (NYSE:SNY), and American Tower Corporation (NYSE:AMT). This group of stocks’ market values match BLK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GS | 74 | 5451988 | 13 |
| TTE | 16 | 1398818 | 1 |
| AMD | 65 | 5254017 | 2 |
| IBM | 41 | 1405372 | 0 |
| NOW | 87 | 7527653 | -4 |
| SNY | 19 | 1287779 | 3 |
| AMT | 61 | 4474779 | 6 |
| Average | 51.9 | 3828629 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.9 hedge funds with bullish positions and the average amount invested in these stocks was $3829 million. That figure was $1085 million in BLK’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand TotalEnergies SE (NYSE:TTE) is the least popular one with only 16 bullish hedge fund positions. BlackRock, Inc. (NYSE:BLK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BLK is 46.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, BLK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BLK investors were disappointed as the stock returned -1.4% since the end of September (through 1/31) and underperformed the market. If you are 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 all of these stocks already outperformed the market since 2019.
Follow Blackrock Inc. (NYSE:BLK)
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Disclosure: None. This article was originally published at Insider Monkey.
