We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards BlackSky Technology Inc. (NYSE:BKSY).
Is BlackSky Technology Inc. (BKSY) a good stock to buy? The smart money was betting on the stock. The number of bullish hedge fund bets went up by 21 in recent months. BlackSky Technology Inc. (NYSE:BKSY) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that BKSY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Chase Coleman of Tiger Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a peek at the latest hedge fund action surrounding BlackSky Technology Inc. (NYSE:BKSY).
Do Hedge Funds Think BKSY Is A Good Stock To Buy Now?
At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in BKSY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Tiger Global Management LLC was the largest shareholder of BlackSky Technology Inc. (NYSE:BKSY) , with a stake worth $51.8 million reported as of the end of September. Trailing Tiger Global Management LLC was Senator Investment Group, which amassed a stake valued at $40.9 million. Samlyn Capital, JANA Partners, and Millennium 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 Altai Capital allocated the biggest weight to BlackSky Technology Inc. (NYSE:BKSY) , around 1.69% of its 13F portfolio. JANA Partners is also relatively very bullish on the stock, earmarking 0.83 percent of its 13F equity portfolio to BKSY.
Now, key hedge funds were breaking ground themselves. Tiger Global Management LLC, managed by Chase Coleman, established the largest position in BlackSky Technology Inc. (NYSE:BKSY) . Tiger Global Management LLC had $51.8 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also initiated a $40.9 million position during the quarter. The other funds with brand new BKSY positions are Robert Pohly’s Samlyn Capital, Barry Rosenstein’s JANA Partners, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BlackSky Technology Inc. (NYSE:BKSY) but similarly valued. These stocks are Model N Inc (NYSE:MODN), City Holding Company (NASDAQ:CHCO), Warrior Met Coal Inc. (NYSE:HCC), FARO Technologies, Inc. (NASDAQ:FARO), Humacyte Inc. (NASDAQ:HUMA), ChemoCentryx Inc (NASDAQ:CCXI), and ConnectOne Bancorp Inc (NASDAQ:CNOB). All of these stocks’ market caps are closest to BKSY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MODN | 13 | 80725 | 0 |
| CHCO | 10 | 14008 | 3 |
| HCC | 29 | 221878 | 8 |
| FARO | 9 | 143046 | -4 |
| HUMA | 5 | 40333 | 5 |
| CCXI | 17 | 73370 | 3 |
| CNOB | 14 | 46747 | -1 |
| Average | 13.9 | 88587 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $159 million in BKSY’s case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Humacyte Inc. (NASDAQ:HUMA) is the least popular one with only 5 bullish hedge fund positions. BlackSky Technology Inc. (NYSE:BKSY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BKSY is 63.3. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately BKSY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BKSY were disappointed as the stock returned -56.6% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
