Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Black Knight Financial Services Inc (NYSE:BKFS) shareholders have witnessed a decrease in hedge fund interest of late. There were 11 hedge funds in our database with BKFS holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Flowserve Corporation (NYSE:FLS), Jacobs Engineering Group Inc (NYSE:JEC), and Zillow Inc (NASDAQ:Z) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to go over the key action encompassing Black Knight Financial Services Inc (NYSE:BKFS).
What does the smart money think about Black Knight Financial Services Inc (NYSE:BKFS)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BKFS over the last 5 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in Black Knight Financial Services Inc (NYSE:BKFS). According to regulatory filings, the fund has a $5.4 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Israel Englander’s Millennium Management holding a $2.7 million position. Some other members of the smart money that hold long positions comprise Terence Hogan’s Addison Clark Management, Dmitry Balyasny’s Balyasny Asset Management and Matthew Hulsizer’s PEAK6 Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest position of the 700 funds followed by Insider Monkey, comprising about $0.5 million in Black Knight Financial Services Inc (NYSE:BKFS) stock, and Scott Fine and Peter Richards’s Empire Capital Management was right behind this move, as the fund sold off about $0.4 million worth of shares.
Let’s go over hedge fund activity in other stocks similar to Black Knight Financial Services Inc (NYSE:BKFS). We will take a look at Flowserve Corporation (NYSE:FLS), Jacobs Engineering Group Inc (NYSE:JEC), Zillow Inc (NASDAQ:Z), and MarketAxess Holdings Inc. (NASDAQ:MKTX). All of these stocks’ market caps are closest to BKFS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLS | 26 | 402485 | -6 |
| JEC | 17 | 147916 | -1 |
| Z | 26 | 614342 | 0 |
| MKTX | 20 | 123477 | 0 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $322 million. That figure was a meager $16 million in BKFS’s case. Flowserve Corporation (NYSE:FLS) is the most popular stock in this table. On the other hand Jacobs Engineering Group Inc (NYSE:JEC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Black Knight Financial Services Inc (NYSE:BKFS) is even less popular than JEC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
