Is Blueprint Medicines Corp (BPMC) Going to Burn These Hedge Funds?

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

Hedge fund interest in Blueprint Medicines Corp (NASDAQ:BPMC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Silver Bay Realty Trust Corp (NYSE:SBY), MakeMyTrip Limited (NASDAQ:MMYT), and Universal American Corporation (NYSE:UAM) to gather more data points.

According to most market participants, hedge funds are perceived as unimportant, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, We look at the aristocrats of this club, approximately 700 funds. These hedge fund managers orchestrate the lion’s share of the hedge fund industry’s total capital, and by tracking their first-class stock picks, Insider Monkey has unsheathed a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, we’re going to view the latest action regarding Blueprint Medicines Corp (NASDAQ:BPMC).

How have hedgies been trading Blueprint Medicines Corp (NASDAQ:BPMC)?

Heading into Q4, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Mark Lampert’s Biotechnology Value Fund / BVF Inc has the largest position in Blueprint Medicines Corp (NASDAQ:BPMC), worth close to $36.3 million, amounting to 7.3% of its total 13F portfolio. On Biotechnology Value Fund / BVF Inc’s heels is Jacob Gottlieb of Visium Asset Management, with an $21.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Christopher James’s Partner Fund Management, Peter Kolchinsky’s RA Capital Management and Richard Driehaus’s Driehaus Capital.

Due to the fact that Blueprint Medicines Corp (NASDAQ:BPMC) has experienced falling interest from the smart money, logic holds that there exist a select few hedgies who sold off their positions entirely last quarter. Interestingly, Nick Niell’s Arrowgrass Capital Partners dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $1.1 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund cut about $0.9 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Blueprint Medicines Corp (NASDAQ:BPMC). These stocks are Silver Bay Realty Trust Corp (NYSE:SBY), MakeMyTrip Limited (NASDAQ:MMYT), Universal American Corporation (NYSE:UAM), and EDENOR S.A. (ADR) (NYSE:EDN). All of these stocks’ market caps match BPMC’s market cap.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $153 million in BPMC’s case. Silver Bay Realty Trust Corp (NYSE:SBY) is the most popular stock in this table. On the other hand EDENOR S.A. (ADR) (NYSE:EDN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Blueprint Medicines Corp (NASDAQ:BPMC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.