Before we spend countless hours researching a company, we’d 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 Black Hills Corporation (NYSE:BKH).
Black Hills Corporation (NYSE:BKH) was in 18 hedge funds’ portfolios at the end of March. BKH has experienced an increase in support from the world’s most elite money managers lately. There were 17 hedge funds in our database with BKH positions at the end of the previous quarter. Our calculations also showed that bkh isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the fresh hedge fund action encompassing Black Hills Corporation (NYSE:BKH).
What does the smart money think about Black Hills Corporation (NYSE:BKH)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards BKH over the last 15 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Black Hills Corporation (NYSE:BKH) was held by Renaissance Technologies, which reported holding $63.1 million worth of stock at the end of March. It was followed by GAMCO Investors with a $22.3 million position. Other investors bullish on the company included GLG Partners, Shelter Harbor Advisors, and AQR Capital Management.
As aggregate interest increased, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the largest position in Black Hills Corporation (NYSE:BKH). Millennium Management had $1.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1 million investment in the stock during the quarter. The following funds were also among the new BKH investors: Jeffrey Talpins’s Element Capital Management, Ken Griffin’s Citadel Investment Group, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now review hedge fund activity in other stocks similar to Black Hills Corporation (NYSE:BKH). We will take a look at CarGurus, Inc. (NASDAQ:CARG), Hawaiian Electric Industries, Inc. (NYSE:HE), First Horizon National Corporation (NYSE:FHN), and Williams-Sonoma, Inc. (NYSE:WSM). This group of stocks’ market valuations resemble BKH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CARG | 24 | 819877 | 5 |
| HE | 12 | 144367 | -1 |
| FHN | 16 | 126038 | -3 |
| WSM | 29 | 371142 | 12 |
| Average | 20.25 | 365356 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $365 million. That figure was $136 million in BKH’s case. Williams-Sonoma, Inc. (NYSE:WSM) is the most popular stock in this table. On the other hand Hawaiian Electric Industries, Inc. (NYSE:HE) is the least popular one with only 12 bullish hedge fund positions. Black Hills Corporation (NYSE:BKH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on BKH, though not to the same extent, as the stock returned 1.7% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
