Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards The Blackstone Group Inc. (NYSE:BX) at the end of the third quarter and determine whether the smart money was really smart about this stock.
The Blackstone Group Inc. (NYSE:BX) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 54 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that BX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare BX to other stocks including PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), and Canadian National Railway Company (NYSE:CNI) to get a better sense of its popularity.
Matthew Hulsizer of PEAK6 Capital
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 we’re going to take a gander at the latest hedge fund action encompassing The Blackstone Group Inc. (NYSE:BX).
Do Hedge Funds Think BX Is A Good Stock To Buy Now?
At Q3’s end, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. By comparison, 49 hedge funds held shares or bullish call options in BX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Blackstone Group Inc. (NYSE:BX) was held by GQG Partners, which reported holding $736.8 million worth of stock at the end of September. It was followed by Farallon Capital with a $309.4 million position. Other investors bullish on the company included Cryder Capital, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Arrow Capital Management allocated the biggest weight to The Blackstone Group Inc. (NYSE:BX), around 19.35% of its 13F portfolio. Tiger Management is also relatively very bullish on the stock, earmarking 12.74 percent of its 13F equity portfolio to BX.
Since The Blackstone Group Inc. (NYSE:BX) has faced declining sentiment from hedge fund managers, we can see that there was a specific group of hedgies that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, worth about $7.3 million in stock. Daniel Johnson’s fund, Gillson Capital, also sold off its stock, about $5.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to The Blackstone Group Inc. (NYSE:BX). We will take a look at PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), Mondelez International Inc (NASDAQ:MDLZ), British American Tobacco plc (NYSE:BTI), Enbridge Inc (NYSE:ENB), and Lam Research Corporation (NASDAQ:LRCX). This group of stocks’ market valuations are closest to BX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNC | 41 | 506241 | 3 |
| EQNR | 11 | 163324 | 0 |
| CNI | 42 | 7392349 | 2 |
| MDLZ | 46 | 1922079 | -7 |
| BTI | 9 | 724383 | -3 |
| ENB | 24 | 211478 | 5 |
| LRCX | 47 | 3519311 | -11 |
| Average | 31.4 | 2062738 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $2063 million. That figure was $2546 million in BX’s case. Lam Research Corporation (NASDAQ:LRCX) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks The Blackstone Group Inc. (NYSE:BX) is more popular among hedge funds. Our overall hedge fund sentiment score for BX is 85. 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. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on BX as the stock returned 14.3% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Blackstone Inc. (NYSE:BX)
Follow Blackstone Inc. (NYSE:BX)
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Disclosure: None. This article was originally published at Insider Monkey.
