How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Blonder Tongue Labs, Inc. (NYSE:BDR).
Is Blonder Tongue Labs, Inc. (NYSE:BDR) a splendid stock to buy now? Prominent investors were getting more bullish. The number of bullish hedge fund bets inched up by 2 lately. Blonder Tongue Labs, Inc. (NYSE:BDR) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BDR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website.Keeping this in mind let’s take a peek at the key hedge fund action surrounding Blonder Tongue Labs, Inc. (NYSE:BDR).
What does smart money think about Blonder Tongue Labs, Inc. (NYSE:BDR)?
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 200% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in BDR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the number one position in Blonder Tongue Labs, Inc. (NYSE:BDR), worth close to $0.1 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Blonder Tongue Labs, Inc. (NYSE:BDR), around 0.0001% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.0001 percent of its 13F equity portfolio to BDR.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Blonder Tongue Labs, Inc. (NYSE:BDR). Citadel Investment Group had $0 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0 million position during the quarter.
Let’s go over hedge fund activity in other stocks similar to Blonder Tongue Labs, Inc. (NYSE:BDR). These stocks are Yunhong CTI Ltd. (NASDAQ:CTIB), Sequential Brands Group Inc (NASDAQ:SQBG), Socket Mobile, Inc. (NASDAQ:SCKT), New Concept Energy, Inc. (NYSE:GBR), Barnwell Industries, Inc. (NYSE:BRN), Benitec Biopharma Inc. (NASDAQ:BNTC), and U.S. Energy Corp. (NASDAQ:USEG). This group of stocks’ market values are closest to BDR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTIB | 1 | 317 | 0 |
| SQBG | 1 | 57 | -2 |
| SCKT | 2 | 107 | 0 |
| GBR | 1 | 22 | 0 |
| BRN | 2 | 236 | 1 |
| BNTC | 1 | 75 | 0 |
| USEG | 1 | 333 | 0 |
| Average | 1.3 | 164 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.3 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $0 million in BDR’s case. Socket Mobile, Inc. (NASDAQ:SCKT) is the most popular stock in this table. On the other hand Yunhong CTI Ltd. (NASDAQ:CTIB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Blonder Tongue Labs, Inc. (NYSE:BDR) is more popular among hedge funds. Our overall hedge fund sentiment score for BDR is 87. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 28.1% in 2020 through November 23rd but still managed to beat the market by 15.4 percentage points. Hedge funds were also right about betting on BDR as the stock returned 36.6% since the end of September (through 11/23) 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.
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Disclosure: None. This article was originally published at Insider Monkey.