Is BL Stock A Buy or Sell?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards BlackLine, Inc. (NASDAQ:BL) to find out whether there were any major changes in hedge funds’ views.

Is BL stock a buy? BlackLine, Inc. (NASDAQ:BL) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. BlackLine, Inc. (NASDAQ:BL) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In today’s marketplace there are a lot of methods stock market investors use to size up publicly traded companies. A couple of the less utilized methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the broader indices by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

David Siegel of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Keeping this in mind we’re going to review the new hedge fund action surrounding BlackLine, Inc. (NASDAQ:BL).

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

At Q4’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in BL over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Among these funds, D E Shaw held the most valuable stake in BlackLine, Inc. (NASDAQ:BL), which was worth $135.8 million at the end of the fourth quarter. On the second spot was Harbor Spring Capital which amassed $58.2 million worth of shares. Toronado Partners, Polar Capital, and Two Sigma Advisors 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 Toronado Partners allocated the biggest weight to BlackLine, Inc. (NASDAQ:BL), around 11.25% of its 13F portfolio. First Growth Capital Management is also relatively very bullish on the stock, designating 5.95 percent of its 13F equity portfolio to BL.

Now, some big names were breaking ground themselves. Harbor Spring Capital, managed by Amit Nitin Doshi, created the biggest position in BlackLine, Inc. (NASDAQ:BL). Harbor Spring Capital had $58.2 million invested in the company at the end of the quarter. Nicolas Boullet’s First Growth Capital Management also initiated a $8.5 million position during the quarter. The other funds with brand new BL positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s check out hedge fund activity in other stocks similar to BlackLine, Inc. (NASDAQ:BL). We will take a look at Reliance Steel & Aluminum Co. (NYSE:RS), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), Sotera Health Company (NASDAQ:SHC), Jones Lang LaSalle Inc (NYSE:JLL), American Financial Group, Inc. (NYSE:AFG), Ralph Lauren Corporation (NYSE:RL), and Euronet Worldwide, Inc. (NASDAQ:EEFT). This group of stocks’ market values resemble BL’s market value.

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As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $551 million. That figure was $324 million in BL’s case. Ralph Lauren Corporation (NYSE:RL) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks BlackLine, Inc. (NASDAQ:BL) is even less popular than RBA. Our overall hedge fund sentiment score for BL is 40. 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. Hedge funds dodged a bullet by taking a bearish stance towards BL. Our calculations showed that the top 30 most popular hedge fund stocks returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th but managed to beat the market again by 0.9 percentage points. Unfortunately BL wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was very bearish); BL investors were disappointed as the stock returned -13.7% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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