Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of BlackRock, Inc. (NYSE:BLK).
BlackRock, Inc. (NYSE:BLK) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. BlackRock, Inc. (NYSE:BLK) was in 42 hedge funds’ portfolios at the end of the first 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 Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 we’re going to take a look at the recent hedge fund action regarding BlackRock, Inc. (NYSE:BLK).
Do Hedge Funds Think BLK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BLK over the last 23 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of BlackRock, Inc. (NYSE:BLK), with a stake worth $267.6 million reported as of the end of March. Trailing Citadel Investment Group was AQR Capital Management, which amassed a stake valued at $177.8 million. Markel Gayner Asset Management, Millennium Management, 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 Ivy Lane Capital allocated the biggest weight to BlackRock, Inc. (NYSE:BLK), around 13.95% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, dishing out 7.83 percent of its 13F equity portfolio to BLK.
Because BlackRock, Inc. (NYSE:BLK) has faced falling interest from the smart money, we can see that there was a specific group of hedgies who sold off their positions entirely last quarter. Intriguingly, Steve Cohen’s Point72 Asset Management said goodbye to the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $48.4 million in stock. Ravi Chopra’s fund, Azora Capital, also cut its stock, about $21.5 million worth. These moves are important to note, as total hedge fund interest was cut by 11 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to BlackRock, Inc. (NYSE:BLK). These stocks are American Express Company (NYSE:AXP), PetroChina Company Limited (NYSE:PTR), Airbnb, Inc. (NASDAQ:ABNB), Goldman Sachs Group, Inc. (NYSE:GS), 3M Company (NYSE:MMM), American Tower Corporation (NYSE:AMT), and The Estee Lauder Companies Inc (NYSE:EL). This group of stocks’ market caps are closest to BLK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AXP | 53 | 24475341 | -7 |
| PTR | 8 | 73088 | 3 |
| ABNB | 52 | 2417824 | -16 |
| GS | 77 | 5057213 | 1 |
| MMM | 41 | 1519815 | -3 |
| AMT | 58 | 4593727 | -3 |
| EL | 59 | 4103128 | 8 |
| Average | 49.7 | 6034305 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 49.7 hedge funds with bullish positions and the average amount invested in these stocks was $6034 million. That figure was $1525 million in BLK’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 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 42.4. 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 17.4% in 2021 through June 18th and beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on BLK, though not to the same extent, as the stock returned 12% since the end of Q1 (through June 18th) and outperformed the market.
Follow Blackrock Inc. (NYSE:BLK)
Follow Blackrock Inc. (NYSE:BLK)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 15 Most Valuable Alcohol Companies
- 15 Largest EPC Companies in the World
Disclosure: None. This article was originally published at Insider Monkey.
