Hedge Funds Are Crazy About Blackstone Inc. (BX)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 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 Blackstone Inc. (NYSE:BX).

Blackstone Inc. (NYSE:BX) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 54 hedge funds’ portfolios at the end of September. Our calculations also showed that BX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare BX to other stocks including The PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), and Canadian National Railway Company (NYSE:CNI) to get a better sense of its popularity.

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. Now we’re going to check out the recent hedge fund action encompassing Blackstone Inc. (NYSE:BX).

Rajiv Jain of GQG Partners

Do Hedge Funds Think BX Is A Good Stock To Buy Now?

At the end of September, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BX over the last 25 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, GQG Partners held the most valuable stake in Blackstone Inc. (NYSE:BX), which was worth $736.8 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $309.4 million worth of shares. Cryder Capital, Arrowstreet Capital, 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 Arrow Capital Management allocated the biggest weight to Blackstone Inc. (NYSE:BX), around 19.35% of its 13F portfolio. Tiger Management is also relatively very bullish on the stock, dishing out 12.74 percent of its 13F equity portfolio to BX.

Seeing as Blackstone Inc. (NYSE:BX) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Israel Englander’s Millennium Management dropped the biggest stake of the 750 funds monitored by Insider Monkey, comprising an estimated $7.3 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund sold off about $5.2 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Blackstone Inc. (NYSE:BX) but similarly valued. We will take a look at The PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), Mondelez International Inc (NASDAQ:MDLZ), British American Tobacco plc (NYSE:BTI), Enbridge Inc (NYSE:ENB), and Lam Research Corporation (NASDAQ:LRCX). This group of stocks’ market caps resemble BX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $2063 million. That figure was $2546 million in BX’s case. Lam Research Corporation (NASDAQ:LRCX) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Blackstone Inc. (NYSE:BX) is more popular among hedge funds. Our overall hedge fund sentiment score for BX is 85. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on BX as the stock returned 22.5% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.