While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding BlackRock Resources & Commodities Strategy Trust (NYSE:BCX).
Is BlackRock Resources & Commodities Strategy Trust (NYSE:BCX) the right investment to pursue these days? Money managers were taking a bullish view. The number of long hedge fund bets rose by 1 recently. BlackRock Resources & Commodities Strategy Trust (NYSE:BCX) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. Our calculations also showed that BCX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 5 hedge funds in our database with BCX holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are numerous formulas investors employ to analyze their holdings. A duo of the most under-the-radar formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace their index-focused peers by a solid margin (see the details here).
At Insider Monkey we scour multiple sources to uncover 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 and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to take a peek at the latest hedge fund action encompassing BlackRock Resources & Commodities Strategy Trust (NYSE:BCX).
What have hedge funds been doing with BlackRock Resources & Commodities Strategy Trust (NYSE:BCX)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BCX over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Mark Coe’s Intrinsic Edge Capital has the number one position in BlackRock Resources & Commodities Strategy Trust (NYSE:BCX), worth close to $1.2 million, amounting to 0.1% of its total 13F portfolio. On Intrinsic Edge Capital’s heels is Ionic Capital Management, led by Bart Baum, holding a $1 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position GRT Capital Partners allocated the biggest weight to BlackRock Resources & Commodities Strategy Trust (NYSE:BCX), around 0.13% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to BCX.
Now, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in BlackRock Resources & Commodities Strategy Trust (NYSE:BCX). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BlackRock Resources & Commodities Strategy Trust (NYSE:BCX) but similarly valued. We will take a look at Patterson-UTI Energy, Inc. (NASDAQ:PTEN), Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI), Intersect ENT Inc (NASDAQ:XENT), Marine Products Corp. (NYSE:MPX), SurModics, Inc. (NASDAQ:SRDX), Washington Trust Bancorp, Inc. (NASDAQ:WASH), and Scholar Rock Holding Corporation (NASDAQ:SRRK). All of these stocks’ market caps are closest to BCX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTEN | 22 | 83691 | -4 |
| BCLI | 3 | 2213 | -3 |
| XENT | 17 | 109447 | 0 |
| MPX | 5 | 15370 | 0 |
| SRDX | 17 | 131928 | 2 |
| WASH | 11 | 22334 | -1 |
| SRRK | 4 | 55800 | -1 |
| Average | 11.3 | 60112 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $3 million in BCX’s case. Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is the most popular stock in this table. On the other hand Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI) is the least popular one with only 3 bullish hedge fund positions. BlackRock Resources & Commodities Strategy Trust (NYSE:BCX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BCX is 39.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on BCX as the stock returned 17.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Follow Blackrock Resources & Commodities Strategy Trust (NYSE:BCX)
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Disclosure: None. This article was originally published at Insider Monkey.
