Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Black Knight Financial Services Inc (NYSE:BKFS).
Is Black Knight Financial Services Inc (NYSE:BKFS) an excellent stock to buy now? Investors who are in the know are getting less bullish. The number of long hedge fund positions were cut by 4 in recent months. Black Knight Financial Services Inc (NYSE:BKFS) was in 15 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with Black Knight Financial Services Inc (NYSE: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 LendingClub Corp (NYSE:LC), Albemarle Corporation (NYSE:ALB), and Equity Lifestyle Properties, Inc. (NYSE:ELS) to gather more data points.
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In the financial world, there are several gauges stock traders can use to size up publicly traded companies. A duo of the most useful gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the broader indices by a significant margin (see the details here).
Now, we’re going to take a look at the latest action encompassing Black Knight Financial Services Inc (NYSE:BKFS).
How have hedgies been trading Black Knight Financial Services Inc (NYSE:BKFS)?
At the end of Q3, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 21% from the previous quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Waterfront Capital Partners, managed by Eduardo Abush, holds the biggest position in Black Knight Financial Services Inc (NYSE:BKFS). Waterfront Capital Partners has a $14.1 million position in the stock, comprising 2% of its 13F portfolio. On Waterfront Capital Partners’s heels is Standard Pacific Capital, led by Douglas Dillard Jr. and Raj D. Venkatesan, holding a $5.2 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Terence Hogan’s Addison Clark Management, Israel Englander’s Millennium Management, and Charles Clough’s Clough Capital Partners.
Due to the fact that Black Knight Financial Services Inc (NYSE:BKFS) has experienced a declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of money managers that slashed their full holdings last quarter. It’s worth mentioning that Larry Robbins’s Glenview Capital dumped the biggest stake of the 700 funds tracked by Insider Monkey, valued at close to $15.7 million in stock. Barry Rosenstein’s fund, JANA Partners, also dropped its stock, about $12.3 million worth of shares. These moves are interesting, as total hedge fund interest was cut by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Black Knight Financial Services Inc (NYSE:BKFS). We will take a look at LendingClub Corp (NYSE:LC), Albemarle Corporation (NYSE:ALB), Equity Lifestyle Properties, Inc. (NYSE:ELS), and Owens Corning (NYSE:OC). This group of stocks’ market valuations is closest to Black Knight Financial Services Inc (NYSE:BKFS)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LC | 15 | 311109 | -11 |
| ALB | 29 | 662313 | -7 |
| ELS | 13 | 380919 | 1 |
| OC | 45 | 1060238 | 5 |
As you can see, these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $604 million. That figure was $42 million in Black Knight Financial Services Inc (NYSE:BKFS)’s case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand, Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 13 bullish hedge fund positions. Black Knight Financial Services Inc (NYSE:BKFS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Owens Corning (NYSE:OC) might be a better candidate to consider a long position.