Blackstone Mortgage Trust Inc (BXMT): Smart Money Remains On The Sidelines

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Blackstone Mortgage Trust Inc (NYSE:BXMT) .

Blackstone Mortgage Trust Inc (NYSE:BXMT) has experienced a decrease in activity from the world’s largest hedge funds in recent months. BXMT was in 17 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with BXMT holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ciena Corporation (NASDAQ:CIEN), Paycom Software Inc (NYSE:PAYC), and InterXion Holding NV (NYSE:INXN) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Hedge fund activity in Blackstone Mortgage Trust Inc (NYSE:BXMT)

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 6% dip from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in BXMT heading into this year, though that came after a decline of 9 in Q4 2015. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, John Khoury’s Long Pond Capital has the biggest position in Blackstone Mortgage Trust Inc (NYSE:BXMT), worth close to $166.8 million, accounting for 7.8% of its total 13F portfolio. The second most bullish fund manager is John Armitage of Egerton Capital Limited, with a $47.2 million position. Remaining peers that are bullish include Charles Clough’s Clough Capital Partners, Mark Kingdon’s Kingdon Capital, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cashed in their entire stakes in the stock during the third quarter. Intriguingly, Arthur Wrubel’s Wesley Capital Management cashed in the biggest position of the 700 funds followed by Insider Monkey, comprising close to $25.4 million in stock. Israel Englander’s Millennium Management also said goodbye to its stock, about $6 million worth.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Blackstone Mortgage Trust Inc (NYSE:BXMT) but similarly valued. We will take a look at Ciena Corporation (NASDAQ:CIEN), Paycom Software Inc (NYSE:PAYC), InterXion Holding NV (NYSE:INXN), and Nu Skin Enterprises, Inc. (NYSE:NUS). This group of stocks’ market valuations are closest to BXMT’s market valuation.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $274 million in BXMT’s case. InterXion Holding NV (NYSE:INXN) is the most popular stock in this table. On the other hand Paycom Software Inc (NYSE:PAYC) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Blackstone Mortgage Trust Inc (NYSE:BXMT) is even less popular than PAYC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None