Were Hedge Funds Right About BlackRock, Inc. (BLK)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of BlackRock, Inc. (NYSE:BLK).

BlackRock, Inc. (NYSE:BLK) was in 47 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 53. BLK has experienced an increase in hedge fund sentiment recently. There were 42 hedge funds in our database with BLK positions at the end of the first quarter. Our calculations also showed that BLK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Tom Gayner of Markel Gayner Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. 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. 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. Now let’s take a look at the new hedge fund action encompassing BlackRock, Inc. (NYSE:BLK).

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

Heading into the third quarter of 2021, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. By comparison, 37 hedge funds held shares or bullish call options in BLK a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the biggest position in BlackRock, Inc. (NYSE:BLK), worth close to $214.1 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Markel Gayner Asset Management, led by Tom Gayner, holding a $192.7 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other peers that are bullish contain Ken Griffin’s Citadel Investment Group, Ken Fisher’s Fisher Asset Management and James Parsons’s Junto Capital Management. In terms of the portfolio weights assigned to each position Ivy Lane Capital allocated the biggest weight to BlackRock, Inc. (NYSE:BLK), around 13.31% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, setting aside 7.47 percent of its 13F equity portfolio to BLK.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Sandler Capital Management, managed by Andrew Sandler, created the most outsized position in BlackRock, Inc. (NYSE:BLK). Sandler Capital Management had $6.7 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $6.5 million position during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, Qing Li’s Sciencast Management, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BlackRock, Inc. (NYSE:BLK) but similarly valued. These stocks are American Express Company (NYSE:AXP), Starbucks Corporation (NASDAQ:SBUX), Sanofi (NASDAQ:SNY), International Business Machines Corp. (NYSE:IBM), Applied Materials, Inc. (NASDAQ:AMAT), Raytheon Technologies Corp (NYSE:RTX), and The Goldman Sachs Group, Inc. (NYSE:GS). This group of stocks’ market caps are closest to BLK’s market cap.

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As you can see these stocks had an average of 51.3 hedge funds with bullish positions and the average amount invested in these stocks was $6849 million. That figure was $1283 million in BLK’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Sanofi (NASDAQ:SNY) is the least popular one with only 16 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 63.8. 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 gained 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on BLK as the stock returned 9.6% since the end of the second quarter (through 11/5) and outperformed the market by an even larger margin.

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