Is BlackRock (BLK) Stock A Buy or Sell?

Is BlackRock, Inc. (NYSE:BLK) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is BlackRock (BLK) stock a buy or sell? Money managers were taking a bullish view. The number of bullish hedge fund bets inched up by 14 recently. BlackRock, Inc. (NYSE:BLK) was in 53 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BLK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 39 hedge funds in our database with BLK positions at the end of the third quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Tom Gayner of Markel Gayner Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage (or at the end of this article). Keeping this in mind let’s take a look at the fresh hedge fund action regarding BlackRock, Inc. (NYSE:BLK).

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

At the end of December, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BLK over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Markel Gayner Asset Management was the largest shareholder of BlackRock, Inc. (NYSE:BLK), with a stake worth $158.9 million reported as of the end of December. Trailing Markel Gayner Asset Management was Junto Capital Management, which amassed a stake valued at $151.7 million. AQR Capital Management, Millennium Management, and Fisher Asset Management 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 Ivy Lane Capital allocated the biggest weight to BlackRock, Inc. (NYSE:BLK), around 14.85% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, earmarking 6.97 percent of its 13F equity portfolio to BLK.

As industrywide interest jumped, key money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, established the largest position in BlackRock, Inc. (NYSE:BLK). Point72 Asset Management had $48.4 million invested in the company at the end of the quarter. Ravi Chopra’s Azora Capital also made a $21.5 million investment in the stock during the quarter. The other funds with brand new BLK positions are Renaissance Technologies, Robert W. Koehn’s Ivy Lane Capital, and Ray Dalio’s Bridgewater Associates.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BlackRock, Inc. (NYSE:BLK) but similarly valued. We will take a look at Raytheon Technologies Corp (NYSE:RTX), ServiceNow Inc (NYSE:NOW), HSBC Holdings plc (NYSE:HSBC), Intuit Inc. (NASDAQ:INTU), The Toronto-Dominion Bank (NYSE:TD), Sea Limited (NYSE:SE), and 3M Company (NYSE:MMM). This group of stocks’ market values match BLK’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 59.7 hedge funds with bullish positions and the average amount invested in these stocks was $3858 million. That figure was $1156 million in BLK’s case. Sea Limited (NYSE:SE) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 14 bullish hedge fund positions. BlackRock, Inc. (NYSE:BLK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BLK is 59.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately BLK wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); BLK investors were disappointed as the stock returned 1.7% since the end of December (through 3/19) 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 in 2020.

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